IndyMac stock at $3-and-change as loan portfolio worsens

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Wall Street continues to show no mercy to IndyMac Bancorp, even as other depressed financial stocks attract buyers.

The Pasadena-based mortgage lender’s shares fell for a seventh straight session today, to an 18-year low. The stock ended at $3.25, down from $3.39 on Monday.

While the average financial stock in the Standard & Poor’s 500 index is up 7.4% since March 31, IndyMac has slumped 34%. Shares of Southland-based lenders Downey Financial Corp. and FirstFed Financial Corp. also continue to be trashed.

IndyMac is the second-largest independent U.S. mortgage lender and long specialized in so-called alt-A loans, which on a quality scale were considered to be between prime and sub-prime. But the real estate biz has come to attach another label to alt-A: ‘liars’ loans,’ because borrowers often couldn’t document their income even though they typically had decent credit scores.

IndyMac has been reeling from soaring defaults on its alt-A portfolio since last summer. And the numbers are getting worse: In a report today, investment bank Keefe, Bruyette & Woods said its study of payment data on securitized IndyMac loans showed that 10.6% of the lender’s alt-A loans were delinquent 60 days or more this month, up from 9.5% in March and 7.7% three months ago.

And within the portfolio, option-ARM loans -- which give borrowers a choice of monthly payments, including so little that their loan balance rises -- ‘have shown the greatest deterioration over the past several months,’ Keefe said.

IndyMac isn’t discussing its portfolio status ahead of its first-quarter earnings report May 12, a spokeswoman said.

Meanwhile, the investment firm that had been IndyMac’s biggest shareholder voted with its feet last quarter: L.A.-based Capital Guardian Trust, which owned 9.2% of the shares as of Dec. 31, sold them all in the quarter, according to a filing with the Securities and Exchange Commission. Cap Guardian declined to discuss the sale. That kind of exit tends to speak for itself.

Posted April 29, 2008