IndyMac Says GSE Costs May Hinder Loan Originations

NEW YORK (Reuters) - IndyMac Bancorp Inc's IMB.N mortgage loan originations slumped 53 percent in November from a year earlier and may be hurt more as Fannie Mae and Freddie Mac tighten requirements on loans they purchase, the company said on a Web site.

IndyMac last year shifted its business to loans eligible for purchase by the two government-sponsored enterprises from the riskier, "Alt-A" type, characterized by loans to borrowers that fall short of income documentation or down payments. The move was made as investors in Alt-A and subprime loans pulled their support as defaults soared.

The GSEs, which posted larger-than-expected losses in the third quarter, have raised fees on loans they guarantee and added a surcharge on loans for higher-risk borrowers.

"Growth in the pipeline and resulting production volume may be negatively impacted by further credit tightening currently being implemented by the GSEs that is requiring IndyMac to implement another round of credit guideline tightening," the company said on its corporate blog, www.theimbreport.com, on Jan. 4.

Total loan production of $4 billion in November was "essentially flat" from October, it said. The loan pipeline of $10.7 billion was down 20 percent for the 12 months to November and up 9 percent from October.

IndyMac Chief Executive Officer Michael Perry last month said he expected the Pasadena, California-based lender will be profitable by the second half of 2008. Its $202.7 million third-quarter loss was more than five times larger than projected as delinquencies mounted.

Delinquencies on prime loans, which include those guaranteed by the GSEs, serviced by IndyMac rose to 6.25 percent in November from 5.8 in October, IndyMac said. In subprime, the percentage of loans in arrears for 30 or more days climbed to 26.87 percent in November from 24.43 percent in October.

IndyMac shares fell 1 percent to $6.21 in mid-morning trading on the New York Stock Exchange. The stock lost 87 percent in 2007.

U.S. building and lending industry leaders in December decried the tighter, more costly requirements enacted by Fannie Mae (FNM.N) and Freddie Mac (FRE.N), asserting the moves will deepen the mortgage crisis.

(Reporting by Al Yoon; Editing by Dan Grebler)