An Internet Resource for Management of Legal Matters
In February, 2010 I posted a Page on my blog entitled "Foreclosure Profits Beat Loan Mod" in which I reviewed the IndyMac Loan Purchase Agreement and Loss Sharing Agreement between the FDIC and OneWest Bank. These are evidently templates that the FDIC devised during the Resolution Trust era of the 1990s. The issue is whether these arrangements are fair or reasonable in practice.
OneWest Bank, which bought out IndyMac in March, 2009, was involved in a short sale case that was disseminated over the internet. It was shown how, after reaching a threshold, OneWest gets a built in profit at the expense of the FDIC whenever there is a loss on a purchased loan. Among the many implications is the effect such sweetheart deals will have over the long term on the general public. Several major investors in OneWest already profited from the subprime mess, and now stand to reap obscene profits in this phase.
The spotlight went off after about a week, the video is no longer readily accessible, and the FDIC simply published a statement that the bank needs to incur a minimum loss amout before it can start taking profits from losses. In the March 27-28 weekend issue of the Wall Street Journal I found this article by Matthias Riekker with the above title indicating there are 94 of these loss sharing agreements outstanding that back $122 billion of assets. There were 175 bank failures in 2009 and 41 in the first quarter of 2010. The way these matters are handled continues to have an important impact on the average person and deserves careful scrutiny.