Shares of alt-A lender IndyMac Bancorp Inc. were in freefall this week after the company reported a significant increase in delinquencies among prime, first-lien loans in November, and said new policies being implemented by mortgage repurchasers Fannie Mae and Freddie Mac could limit future growth.

IndyMac said that about 75 percent of its $4 billion in November loan production was eligible for sale to the government-sponsored enterprises (GSEs), with production of prime jumbo loans exceeding the $417,000 conforming loan limit totaling just $600 million.

The GSEs have increased surcharges for borrowers with credit scores below 680 sometimes classified as “alt-A,” and will require down payments of at least 5 percent on all loans in “declining markets” (see Inman News story).

Although IndyMac expects the loans it made in November to perform better than those it made last year and in the first nine months of 2007, credit quality of the company’s $196 billion serving portfolio continued to decline.

About 93.5 percent of loans in the portfolio are prime, first-lien loans, and the percentage of those loans that are delinquent by 30 or more days grew to 6.25 percent in November — a 45-basis-point increase from October.

Although subprime loans make up only 2.8 percent of IndyMac’s servicing portfolio, more than one in four such loans — 26.9 percent — were delinquent by 30 days or more in November. That’s up from 24.4 percent in October.

IndyMac said that its foreclosure rate of 1.41 percent is lower than the industry average of 1.69 percent, in part because its loans have lower loan-to-value ratios — 73 percent on average.

As of Sept. 30, IndyMac held credit risk on approximately 22 percent of its servicing portfolio, including $4.9 billion in loans held for investment and $13.7 billion in loans held for sale. The company’s risk also includes $416 million in non-investment-grade and residual securities related to $22.8 billion of collateral in IndyMac securitizations, with reserves for losses of $835 million, or 3.7 percent, of the underlying collateral.

Shares of IndyMac Bancorp were down more than 25 percent in afternoon trading Wednesday, and at just over $4, have lost about 90 percent of their value from a 52-week high of $44.05.


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