IndyMac "largest" short sale loss not that large after all
In a recent article by ChicagoMag, a Chicago Tribune website, a specific 16-room home was sold in November for a buyer-impressive price of $1.05 million — mind you, that’s 38% of what it cost to build.
In approving the short sale, the "lender" IndyMac was identified as accepting a loss of more than $1 million.
"That’s the largest loss I’ve seen a bank take [in the western suburbs]," said Bert Gor, the short-sale specialist and Re/Max agent who handled the sale.
Linking back to the story we continued on with our work here at HousingWire. Problem is, it isn't true.
Sources brought up a solid point to HousingWire: IndyMac is actually the servicer of the short sale, so how it is the bank would absorb the loss?
Take a look at the Will County Recorder document — pay close attention to the red asterisk.
From the document, it appears the asset was held in a securitized trust — INDA Mortgage Loan Trust 2007-AR5 —with IndyMac acting as the servicer of the trust.
Thus, the real losers of the deal were the investors, considering the lost attributed to the short sale will be passed on to the holder of bond in the form of a Realized Loss. And to be fair, IndyMac may have invested in its own RMBS vehicle, a common practice. Point is, IndyMac didn't not take the massive hit suggested in ChicagoMag.
All of this comes as little compensation, taking into account the legality issues IndyMac has faced from the Federal Deposit Insurance Corp., which won an $168 million verdict against three former officers of the company for their respective roles in approving 23 troubled loans right before the housing crisis.
Nonetheless, we had to set the record straight.