On Yahoo news this AM, IMB was reported to have sold $335,000,000.00 in a "private label securitization" This transaction resulted in a $2,000,000.00 dollar loss. Naturally, anytime you sell anything at a loss, that's not a good thing. But I think all is not bad when you look at some of the reported details. The pool was sold at 99.7% of face value compared with a book value of 100.3%. In todays environment, that's not bad at all. I've seen reasonably good portfolios sold for way less (I assume, this sale only involved some of the best loans in the portfolio). Some portfolios have sold for 70% or even 50% of book recently, and I'm not talking about complete trash. To get 99.7% tells me two things. One is that at least the loans being sold, are of high quality. The other thing this says is that IMB was able to negotiate from some position of strength. 99.7% is not a fire sale in this market. Citi just announced for example, a sale of some of it's securities for 90% of face value, with rumors suggesting actually less at only high 80's (as reported on MSNBC this morning). This is a reason in my view for some very guarded, cautious optimism for IMB.
What this transaction does not say in my view is that IMB is out of the woods. It does not say that the entire portfolio is worth as much. We don't know what future loan losses may be out there in the future.......yadda, yadda............. all the other stuff we all know about with all lenders.
But this news seems to be a glimmer of hope for the workers at IMB...............In the past others have suspected that my pessimism was do to my supposed "short" position on IMB stock. Maybe some will now suggest that I have "calls" on the stock now. Neither is true, just my 2 cents.
Randall Batman
Joined: 19 Oct 2007
Posts: 720
Location: Orange County, California
This is NOT basic business. This is a huge win for IMB and the industry as a whole. Basic business is the multiple hundreds of millions of dollars worth of business that IMB sells to Fannie/Freddie/HUD on a monthly basis.
What this trade represents is the small portion of imb's book that includes Alt-a and jumbo product that successfully traded to someone other than the GSE's.
So much misinformation on this site it is rediculous (mainly the forums). But just like crack to an addict it is hard to stop coming back to this site for more "junk".
So much misinformation on this site it is rediculous (mainly the forums). But just like crack to an addict it is hard to stop coming back to this site for more "junk".
First misinformation on the site I find that interesting as I find the opposite to be true. I think ML-I goes above and beyond to specify if information has been verified or is rumor. On the forums it is all discussion and opinion so if you are getting your news on the forums what did you expect? Either way at least you keep coming back.
I guess I'm confused on how selling loans at a loss is a good thing?!? Just because they didn't sell at 90 or 85 that is somehow good?!?!? What's even better is that IMB doesn't talk about their cost to originate (150 bps or more) so the loss is more significant than they are reporting.
I've got a great idea. Why don't you go out and do your grocery shopping, spend the time going up and down the aisles, and then I'll buy your groceries from you as soon as you leave the store for 99 cents on the dollar. Let's see how long THAT lasts.
1986CareerGirl Flash in the pan
Joined: 03 Dec 2007
Posts: 90
Location: California
I guess I'm confused on how selling loans at a loss is a good thing?!? Just because they didn't sell at 90 or 85 that is somehow good?!?!? What's even better is that IMB doesn't talk about their cost to originate (150 bps or more) so the loss is more significant than they are reporting.
I've got a great idea. Why don't you go out and do your grocery shopping, spend the time going up and down the aisles, and then I'll buy your groceries from you as soon as you leave the store for 99 cents on the dollar. Let's see how long THAT lasts.
It's like when you're gambling.. you ONLY lost $1,000. As opposed to losing as much as your buddy, who lost $2,000.
_________________ I plan to live forever, so far so good.
I guess I'm confused on how selling loans at a loss is a good thing?!? Just because they didn't sell at 90 or 85 that is somehow good?!?!? What's even better is that IMB doesn't talk about their cost to originate (150 bps or more) so the loss is more significant than they are reporting.
I've got a great idea. Why don't you go out and do your grocery shopping, spend the time going up and down the aisles, and then I'll buy your groceries from you as soon as you leave the store for 99 cents on the dollar. Let's see how long THAT lasts.
The good thing is that such a sale has not even been possible in recent weeks, and was it was beginning to appear like it might not be available any time soon. So while the sale was at a loss of a few bps, the sale set the baseline for where these loans now need to be priced in order to have appeal to investors.
Additionally, the sale frees capital for Indymac, making a sale or merger less likely.
Doesn't take a rocket scientist to see the value far beyond the few bps loss.
Randall - one reason I disagree with you that Indymac would close wholesale is that there is not the strong retail and/or banking base that BofA and WAMU both had. So basically, if they're not doing wholesale they're not doing much. To end wholesale would mean they would be satisfied to cut themselves back to a minor player. A shut down or sale would be much more likely. Volume of agency business must increase or that is the future they'll be facing.
I guess I'm confused on how selling loans at a loss is a good thing?!? Just because they didn't sell at 90 or 85 that is somehow good?!?!? What's even better is that IMB doesn't talk about their cost to originate (150 bps or more) so the loss is more significant than they are reporting.
I've got a great idea. Why don't you go out and do your grocery shopping, spend the time going up and down the aisles, and then I'll buy your groceries from you as soon as you leave the store for 99 cents on the dollar. Let's see how long THAT lasts.
By the way, your estimate of origination costs is way off the mark. Usually those are calculated on dollars per loan, not bps. other than commission, it costs the same to book a $500k loan as it does a $100k loan.
Last year the average was somewhere around $800 - I hear, anecdotally I admit, that cost has been driven down to $600 or less now. With the new technology being released to the market shortly, that could go even lower.
Beyond that your point is taken. However that is not precisely how the accounting is handled, so the press release is accurate as far as it goes.
The good thing is that such a sale has not even been possible in recent weeks, and was it was beginning to appear like it might not be available any time soon. So while the sale was at a loss of a few bps, the sale set the baseline for where these loans now need to be priced in order to have appeal to investors.
Additionally, the sale frees capital for Indymac, making a sale or merger less likely.
Doesn't take a rocket scientist to see the value far beyond the few bps loss.
Exactly. If Indymac didn't sell it it could've caused their collapse. Now they don't have to worry about that pool of loans. The sooner the vultures come in the better.
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