FBI Investigating IndyMac For Fraud In Home Loans To Risky Borrowers

WASHINGTON — The FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud, an official said Wednesday of the government's latest target following the collapse of the nation's subprime mortgage market.

It was not immediately clear how long the FBI's probe of the bank has been ongoing _ or whether it was opened before last Friday's takeover of IndyMac by the Federal Deposit Insurance Corp.

The investigation appears to be is focused on the company and not individuals who ran it, a law enforcement official told The Associated Press. The official spoke on the condition of anonymity because he was not authorized to speak publicly about the investigation.

IndyMac Bank's assets were seized by federal regulators after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures.

The bank is the largest regulated thrift to fail in the last 20 years, regulators said.

Across the country, reports of mortgage fraud have soared over the past year as the subprime mortgage market collapsed, and defaults and foreclosures soared.

IndyMac's operations were transferred to the FDIC because bank regulators did not think the lender could meet its depositors' demands. The FDIC is now running the bank under the name IndyMac Federal Bank, FSB.

FDIC spokesman David Barr declined comment Wednesday.

It's unclear what penalties IndyMac could face now that it has been taken over by the FDIC. Generally, companies guilty of illegal activity can face civil charges and be forced to pay sanctions. In some cases, investigations that uncover new information can lead to focusing on new targets _ like individuals. But it's unknown whether the FBI's case against IndyMac will do so, or how it could pursue charges against a now-defunct corporation.

Shortly after the FDIC took over operations, Barr said most depositors were given immediate access to up to $100,000 in their accounts and 50 percent of any money beyond that threshold. Depositors with joint accounts or retirement accounts could immediately withdraw greater sums.

Depositors were given receivership certificates for any money they couldn't immediately withdraw and may be able to receive some of that money after the bank's assets are sold off.

Early this week, hundreds of worried IndyMac customers lined up out of the bank's headquarters branch in Pasadena, Calif., demanding to withdraw as much money as they could or get answers about the fate of their funds.

Over the last year, and faced with a cratering housing market, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors.

Countrywide Financial Corp., formerly the nation's largest mortgage lender and now owned by Bank of America Corp., is also under scrutiny.

Additionally, two former Bear Stearns managers were indicted last month on conspiracy and securities and wire fraud charges alleging they lied to investors in a hedge fund that tanked last year as the subprime market collapsed. Those charges marked the first criminal charges to arise on Wall Street from the subprime mortgage debacle.

In all, the FBI is now investigating 21 companies tied to the subprime mortgage crisis, up from 19 last month. Authorities are looking into at least 1,400 mortgage fraud cases nationwide, and more than 400 real estate industry players have been indicted since March.

FBI Director Robert Mueller has said the investigations focus on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments. Losses to homeowners and other borrowers are estimated at over $1 billion.

___

On the Net:

FBI: http://www.fbi.gov/

Federal Deposit Insurance Corp: http://www.fdic.gov/

IndyMac: http://www.indymac.com/

Comments

[Manuel]

03:08 AM on 07/17/2008

Bank fraud is hard to prove if documentation is orderly.

Manuel

[WIpatriot]

10:29 AM on 07/17/2008

...or missing altogether.

[Rule Of Law]

02:11 PM on 07/17/2008

You mean like Cheney's emails?

[emerywood]

11:30 PM on 07/16/2008

Damn ! I should have gone to IndyMac Bankcorp last year and got myself a liar's loan. They would never ask me for my income or assets or tax return. If I wanted to delay my first payment, no problem. They would just add it to the final payment years later. I could have bought a big home in Beverley Hill and lived it up for a couple of years, at least before the first mortgage payment is due. The only thing I could have lost is my credit rating.

[Veri]

10:33 PM on 07/16/2008

To all people who believe in deregulation, are you getting the picture now?

[FilthyPerson]

09:59 PM on 07/16/2008

Related future headline ...

"Today Chris Dodd asked for his name to be withdrawn as a possible Vice Presidential nominee." ... during visiting hours.

If only these things worked that fast.

[jqcitizen]

09:38 PM on 07/16/2008

Attorney General Mukasey may well roll the head of FBI Director Mueller for allowing his troops to investigate corrupt banking institutions.

Remember Alberto Gonzales' firing of US Attorneys for having the audacity to investigate corrupt elected officials?

[Toonadude]

09:28 PM on 07/16/2008

Add the IndyMac executives to the list of pardons Bush will be signing on the morning of January 20, 2009. But at the bottom of the pile.......Rove might get nervous if the clock is approaching noon on that day and the shrub hasn't signed his yet.

[TXfemmom]

09:29 PM on 07/16/2008

Every one of these banks and financial institutions committed fraud. Remember, the Republicans are the Party of FRAUD. The Reagan/Bush administration brought us the Savings and Loan debackle, and the Bush family got their share of the crime. Then, the Republican-controlled Congress of the 1990's, and especially PHIL GRamm, brought us the deregulations which led to Enron and the subprime market and Bush didn't want or let anyone step in to stop it.

[hoopesaz]

12:50 AM on 07/18/2008

So when a republican is president, it's the president's fault. When a democrat is president, it's congresses fault. Be fun to see what creative ways dem's come up with for blaming the world's problems on republicans when they control the presidency and congress. Oh don't get me wrong, I'm sure you'all will justify it somehow.

[teacake]

08:05 PM on 07/16/2008

I would not be surprise if IndyMac is found guilty. From what I know IndyMac folks have been practicing not only 'poor business judgements' but also unethical and illegal maneuvers that have collectively led to this disastrous point. In short, IndyMac gets what deserve. I think the FBI is doing the right thing to bring light to a very crooked group of people. They should learn the lesson of their lives.

[Boboday555]

07:48 PM on 07/16/2008

Relax everyone, the FBI is on the case...................yeah!
Heads are sure to roll now.

[BlueZoo]

07:04 PM on 07/16/2008

I swear I don't understand how all of this happened! In 1993, we had to show our last five years of income tax returns, current paychecks from both companie we worked for, our utilities' bills, our bank account statements, any/all additional investment records, and a credit report, in order to purchase our home - all required by the mortgage lender Countrywide! What the hell happened in the 15 years since then! Indymac and the 21 others under investigation should be closed and all loan officers prosecuted. This whole mess is the result of nothing more than sheer greed.

[letsgetsmart]

08:17 PM on 07/16/2008

In the last 23 years I have seen a lot of change in loan qualification. I don't remember ever asking a client for the list that you mentioned. Your list gives me the impression that someone was trying to find a way to not go through with the deal by setting more and more hurdles but you handled them all. Two years verification of income and residence and proof of cash reserves and a credit report with lien and judgment check should have done the job. Some used to verify as much as three years. Since you did this the credit scoring system has matured and less documentation is needed for qualification depending on your credit. I agree that the republicans changed so many oversight rules that the investors did what ever they wanted but for the most part, the loan officer or originator is not at fault because every file is underwritten and if it passes the test then it passes the test. The only people that may be liable on the originator side would be the owners of the originator firms because it was they who had to have the licenses to operate but I don't see how this would happen because they are constantly audited.

[letsgetsmart]

08:23 PM on 07/16/2008

PS
Keep in mind that the originators have all kinds of discrimination laws that they have to obey so they can't pick and choose which files they want to work on. Equal opportunity laws. Originators are always audited in this area very closely. All turn downs are reviewed by the state auditors.

[JiminNC]

06:59 PM on 07/16/2008

I am sure they will find the culprits and punish them. It will be a public trial and conducted fairly on behalf of the American people. Right ... and Manni is an intelligent person over 14 years old.

[SaulGoode]

06:58 PM on 07/16/2008

Is the FBI investigating Schumer?

[VolvoBirkenstock]

07:19 PM on 07/16/2008

No. they are investigating nametr0lls.

What did SaulGood do, prove you to be an ignorant right wing p o s?

[teacake]

08:05 PM on 07/16/2008

Your comment exposes your own despicable ignorance, which seems to be so prevalent among the GOP, who have been infected with the deadly virus: GREED.

[samandally]

06:36 AM on 07/17/2008

Teacake, and there are no greegy Democraps either, right?

[KOisGod]

06:50 PM on 07/16/2008

The entire bush administration needs to be investigated for fraud

[teacake]

08:08 PM on 07/16/2008

WELL SAID!

[WIpatriot]

10:31 AM on 07/17/2008

Treason, actually.

[falco]

06:33 PM on 07/16/2008

It started with the inception of the private bank - the Federal Reserve, IMHO. Invented by the elite, owned by the elite, blackmailed into actuallity, and to this day, it continues to make trillions of dollars off of us and keeps us in perpetual slavery. Why? To keep societal structure (caste system masked as freedom) in place. So we cannot jump class. So there are enough worker bees to keep the rich rich. Problem is, this imposed system has been going on for so long that the elite are starting to look at us as cattle. Useless eaters, mucking up "their" environment. Too many of us around. Thus, aspartame, flouride, pharmaceudicals, vaccinations, AIDs, bird flu, the list is long. "Audio Letters" by Dr. Peter Beter is a good read on the REAL history behind the scenes.

[DesertLight]

06:44 PM on 07/16/2008

Interesting post. Most people don't realize that their homes are their burden. The government is the only one to make money on the houses, tax, tax and tax.

[VolvoBirkenstock]

07:18 PM on 07/16/2008

Going to lie on this thread, too, fraud?

[WIpatriot]

07:35 PM on 07/16/2008

Right, there's no interest, interest, interest. What tripe are you peddling?

[DesertLight]

06:56 PM on 07/16/2008

I must admit a bit of ambivalence towards reading a book by Dr Peter Beater.

[VolvoBirkenstock]

07:19 PM on 07/16/2008

Run along, fraud

[fungeezer]

06:26 PM on 07/16/2008

"The investigation appears to be is focused on the company and not individuals who ran it"

Interesting. Punish the company if wrongdoing is found but never mind the wrongdoers who might have caused it. Like having shareholders in trouble for what the execs did.