Sometimes it’s the little things that give you a sign that something is amiss.
Our firm had been approached recently by IndyMac to perform appraisals for their growing mortgage presence in our market.
Over the weekend, IndyMac was seized by regulators.
As many as 150 banks may fail in the next 12-18 months. IndyMac was the second largest failure in history.
We were wary of IndyMac because of a previous experiences 5-7 years ago when we found them to be mainly focused on paying below market appraisal fees, much like an appraisal management companies did and still does. There were some good people at IndyMac who had moved from other banks who recommended us for work back then, but the low fee mentality prevailed.
From IndyMac’s perspective, its pretty obvious that the cost of doing business in Manhattan is EXACTLY the same as Bismark, ND, no? Appraisal fees should be the same across the country, no? [tone: sarcastic]
Last summer, after American Home Mortgage imploded, IndyMac hired most of AHMs sales force. I repeat: IndyMac hired the sales force of a lender that went out of business.
This go ’round we could charge our standard fees and turn appraisals around in our normal times for IndyMac. But eventually (in May) they began to want our turn times to be 48 hours – I am paraphrasing:
“We’ll give you a lot of work if you can turn the reports around in 2 days.”
Since we were unable to comply, we had to give up on what had been a steady client.
Think of a 3-5 day appraisal turn time differential to a lender in the context of a 30 year mortgage.
Today it’s a reasonable argument to suggest that IndyMac was not reasonable in their appraisal turn time expectations. One year ago that would have been described as progressive thinking on their part.
I am hopeful that the small amount we have in arrears ($1,800 – happily we received payment today for a bunch of other outstanding invoices). Hopefully FDIC will pay their bills.
Monday morning quarterbacking (literally)
My first instinct was to get down on IndyMac for their old school, rush the appraiser approach.
Then it dawned on me – the employees we were dealing with in May/June could have known that the bank was going under very soon and that is why we were being rushed. Admittedly I am reaching here but it makes sense.
I would bet mortgage processors and loan officers were pretty confident that IndyMac was headed for trouble and needed to get the deals in faster in order to make their commission.
I am so glad we got that bad vibe in May and opted not to continue the relationship. I guess those decision makers are out of the picture now. Still, their depositors are worried.
FDIC is trying to help homeowners out a bit.
How about paying back the little ‘ol appraisers?
Note: I must have been half asleep when I posted last night (correction: I was). So many typos, bad links and grammar errors (ok, I know this is not far from my usual delivery) that even I was mortified. I revised keeping the same message, but easier to follow.
This is one awesome leading indicator on an impending lender implosion. It borders on insider information, it’s that good. You could run an anonymous website where you post which lenders’ loan officers are trying to hurry things up, charge thousands of dollars for access to traders looking for the next great short opportunity… until the SEC bans all short selling altogether in their next Five year Plan for Make Benefit Glorious Nation of United States.