Anyone in the reverse mortgage business knows plenty about IndyMac Bank, which was the owner of Financial Freedom before the FDIC took over the bank in July of 2008.

Michael Perry, former CEO and Chairman of IndyMac Bank, is taking to his personal website to defend himself after being hit with lawsuits from the Securities and Exchange Commission (SEC), the Federal Insurance Deposit Corporation, and an unknown but likely large number of private civil cases.

“I have kept silent for three years in the hope that I would be left alone and allowed to rebuild my professional life, but unfortunately that has not been the case. I have been forced to defend myself against unwarranted and false public allegations,” Perry writes.

The site provides Perry’s view and a significant number of emails and other documents related to his tenure at the bank and will eventually focus on the government’s lawsuits against him.

This site’s purpose is to counter the allegations in these lawsuits (and regurgitated in the press as authoritative, when they are not) with the truth and the facts, for those who care to spend the time to read the documents on this site and understand them. I plan to start out slowly, focus on the government cases, and then if I have the time and it is warranted, expand the site to include my views based upon my experiences and post-crisis study of its true systemic and macroeconomic causes.

The fall of IndyMac was pretty much guaranteed after Rep. Charles Schumer (D-N.Y.) published a letter stating the bank ”may have serious problems with its current loan holdings, and could face a failure if prescriptive measures are not taken quickly.”

The letter—which was also sent to regulators—lead to a “run on the bank that rapidly depleted the bank’s ample liquidity,” writes Perry.

IndyMac owned Financial Freedom, which at the time one was one of the largest reverse mortgage lenders in the country.

The website is an interesting read, check it out below.

Not Too Big to Fail

Thanks to Garret Watts for the heads up on the site.

Last year, volume was down 37% from its peak in 2008 and this year it’s expected to fall again according to John Lunde, president of Reverse Market Insight. What’s driving the downward trend?

The exits from Bank of America, Wells Fargo, and Financial Freedom, which together accounted for about 35% of the market, says Lunde.

“We’ve noticed a down trend since Bank of America stopped taking applications,” he told Reuters. Wells Fargo’s departure was announced in June, so it’s too difficult to say how it will impact the number of loans originated.

If the lenders hadn’t exited the business, volume would’ve likely grown during 2011 says Lunde.

“The industry was on pace to grow before the exits. This year’s decline will be all about these companies leaving the market.”

The layoffs come following OneWest’s decision to close down Financial Freedom and exit the reverse mortgage business, a move the company announced on March 21.

Financial Freedom, which formerly operated a wholesale reverse mortgage origination channel as well as a retail channel, was the seventh largest lender in 2010, but saw volume decline 78.5% from 2009 on the wholesale side, and a 71% drop in its retail reverse mortgage business last year. OneWest acquired the company as part of an IndyMac acquisition in 2009.

At the time of its departure, CEO Michelle Minier told the company that OneWest had decided to leave the reverse mortgage business based on the regulatory environment and an aim to focus on the bank’s core businesses.

The Financial Freedom layoffs accompany job losses in other Irvine-area banks including Wells Fargo and State Street Bank and Trust Co., according to the Orange County Register Report.

View the Orange County Register report.

Written by Elizabeth Ecker

“After careful consideration, we have decided to exit the wholesale reverse mortgage origination business based on the regulatory environment and the desire to focus on the bank’s core businesses,” she said.  ”The wholesale reverse mortgage origination channel represents the majority of Financial Freedom’s origination business and is the only wholesale origination channel within OneWest.”

As a result of exiting wholesale, the company said it’s also closing its retail origination channel due to the limited presence and scale.

“While we are exiting these origination channels, we remain committed to servicing our significant reverse mortgage loan portfolio.  We will continue to place a strong emphasis on providing professional, quality service to our customers.”

All completed loan applications must be received no later than March 31, 2011 and all pipeline loans must be funded no later than May 20, according to the letter. For current Financial Freedom customers, loans will continue to be be serviced, so there will be no impact on borrowers.

The shutdown has been rumored for several weeks, but the official announcement came today.

Financial Freedom’s volume and influence in the industry has fallen drastically the last few years, especially since OneWest Bank acquired the company as part of the IndyMac acquisition in 2009. While One West expressed an interest in reverse mortgages, it never really backed up its claims by letting volume continue to fall after the acquisition.

By the end of 2010, wholesale volume fell 78.5% from the prior year and retail was down 71.4% according to data from Reverse Market Insight.  The company endorsed 3,314 reverse mortgages in 2010 and was the 7th largest lender.

Bart Johnson, former president of Financial Freedom and Tony Garcia, current proprietor of Liberty Street Financial, have pooled their experience to raise $5 million in capital for the new company along with an investment team including Jim Benson and Alan Botsford of financial services investment firm Benson & Botsford. Johnson will serve as company president; Garcia as CEO; and Benson and Botsford as board members.

The company plans to take advantage of the current regulatory climate that makes it challenging for brokers to compete with large lenders.

“There is a Federally-mandated industry consolidation, and BGJ provides the immediate safe-haven that everyone is scrambling for,” said Tony Garcia. “Broker shops have no choice but to affiliate with a major lender, and we offer a very attractive new alternative in the market.”

Liberty Street would be the first broker company to join the group as a “member company,” and the company says it intends to systematically target and recruit other strong players nationally.

“We have a vision for what reverse mortgages should look like and we think the current regulatory environment has sent a lot of people scrambling…We can provide a broader platform for those who can’t qualify to become a lender but don’t want to become an employee of a big bureaucracy,” Johnson told RMD.

The company aims to close 800 to 1,000 reverse mortgage loans per month, which would put it in the ranks of the top five lenders in the industry. Until licensing is in place, National Senior Home Equity plans to partner with MetLife, which will perform on behalf of the new company during the interim. The partnership is mutually beneficial, Johnson explained, in that it offers a capital guarantee for brokers who might otherwise be considered as a higher risk.

The intention of the leadership is to grow National Senior Home Equity for sale. “We realize that competitors are trying to exploit the uncertainty in the marketplace, but we believe we offer a much better opportunity,” Johnson said. “We start with higher payouts on loans, work with companies to grow their businesses and improve profitability, and strive for an exit event that would permit participants to monetize a portion of their wealth at a market multiple simply not available to any of them individually. No one should go anywhere without talking to us first.”

Johnson says the company is looking in the future to offer products available not only to the 62+ population, but extending to a lower age bracket including those who are age 55 and up.

“It’s still a vastly underserved market niche,” he said.

Written by Elizabeth Ecker

While other wholesalers like Live Well Financial have offered a no SFSA for adjustable rate reverse mortgages to brokers, Financial Freedom’s margin makes it the best in the market said several brokers on Wednesday.

For the last few months, brokers haven’t been able to compete against banks since they’re eliminating the upfront costs and servicing fee for adjustable rate products.  The new offering from Financial Freedom allows them to at least remain competitive, but none of the lenders said they planned to send the company any business.

For years, Financial Freedom was the largest wholesale lender and no one came close to matching their production.  But when IndyMac started to run into trouble, the company’s volume started to fall dramatically and continued after it was acquired by One West.

Despite One West claiming it’s dedicated to the reverse mortgage business, this year hasn’t been any better.  Wholesale reverse mortgage volume is down  72.8% during 2010, making them the 6th largest wholesale lender according to data from Reverse Market Insight.

One has to wonder whether this is the last ditch effort to drum up some business.  RMD asked the company, but has yet to receive a response.

Laughlin announced his resignation from the Pasadena, California-based OneWest on June 21 and will stay with the bank through the end of July, according to spokeswoman Diane Henry.

“Terry brings deep mortgage and financial services leadership experience,” Barbara Desoer, president of Bank of America’s home-loan and insurance unit, told employees in a memo obtained by BusinessWeek. “He has played a critical role in the mortgage industry developing creative mortgage finance solutions that balance the need of customers, investors and shareholders.”

OneWest Bank is the parent company of Financial Freedom, the 5th largest reverse mortgage lender in the country according to data from Reverse Market Insight.  It was acquired as part of the deal when OneWest purchased IndyMac Bank in March of 2009.

OneWest CEO Resigns, to Replace Schakett at BofA (BusinessWeek)

The company introduced a “HECM Fixed No Service Fee 2″, which improved pricing on their fixed rate product to compete with the 100% Mortgage Insurance Premium credit from Bank of America.

In a message to correspondents, MetLife said it strives to be the lender of choice. “One of the ways we intend to reach this goal this is by offering a wide array of products that best serve the needs of the senior borrower,” said the company.

It eliminated the previous HECM fixed with no servicing fee as of Friday last week. MetLife also rolled out a lower fixed rate rate product at 4.99%, matching Live Well Financial.

Below is a chart we published last week showing the growth of the fixed rate product.