Moody's to review IndyMac credit rating |
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Published
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Tue, 28 Aug 2007 13:56
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NEW YORK (AP) - Credit rating agency Moody's Investors Service said Tuesday it is reviewing IndyMac Bancorp Inc. and its thrift subsidiary IndyMac Bank FSB for a possible downgrade because of the company's exposure to the troubled mortgage market.IndyMac is one of the largest alt-A mortgage lenders in the nation. Alt-A mortgages are loans given to customers with minor credit problems or who are unable to fully document their income and assets like a traditional prime borrower.Investors have become increasingly worried about the value of mortgages amid rising delinquencies and defaults. Those worries have spread into the larger market, leading investors to avoid purchasing nearly all mortgages on the secondary market.Moody's predicts IndyMac will have to take a large write-down in the third quarter in the value of loans it is holding for sale, because few investors are willing to purchase the loans.'It is unclear if inventory write-downs would be limited to one quarter,' said Sean Jones, a senior vice president at Moody's Financial Institutions Group. 'These potential write-downs, and the significant drop in residential mortgage loan origination and sales volumes, is likely to weigh on the thrift's profitability for a few quarters.'Moody's added IndyMac has strengthened its liquidity in recent months by focusing on growing its deposits at its bank and through Federal Home Loan Bank advances.IndyMac currently has an issuer rating of 'Baa3' and its banking subsidiary has a bank deposits rating of 'Baa2.'Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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