Lender IndyMac has been know as the leader in Alt-A loans and built their business on the backs of small business owners and those that were outside of the normal lending channels. Now, as the secondary market for lending has dried up for subprime and Alt-A, the company has had to change directions.

IndyMac Chairman and Chief Executive Michael W. Perry announced yesterday that the company is going to focus on prime loans and home refinancing leaving Alt-A in the dust. The company plans on making 90 percent of it’s business loans which will be approved and bought by Fannie Mae and Freddie Mac.

It will be interesting to see if IndyMac will be able to make the transition to the prime mortgage market. The alternatives of not making the change would almost guarantee the demise of IndyMac as the business they became a leader in for the most part does not exist anymore. But the company will now be in a crowded field where there is a great amount of competition and very little they can differentiate themselves in except on price.

The lender said Tuesday that 90% of the loans it made from now on would be of the type bought by Fannie Mae and Freddie Mac, which buy nearly all prime mortgages made for less than their $417,000 maximum.The other 10% of IndyMac’s volume is expected to be prime home equity loans and prime jumbo mortgages.
The company, which funded nearly $90 billion in mortgages last year, said in a news release that the shift would substantially reduce the firm’s mortgage volume but would increase profit margins in the fourth quarter. via Los Angeles Times.

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