Mortgage Lender Implode journalist Teri Buhl is reporting that Dune Capital Management has won the bidding for IndyMac. While a sale price for the transaction could not be determined, an IndyMac insider quoted in the article said the FDIC is trying to get Dune to pay more for Financial Freedom.
According to the report, Dune would buy the entire bank, including the 33 branches, the reverse-mortgage unit and the $176-billion loan-servicing portfolio, the report says:
According to sources inside of Indy, part of the concession on the deal by the Federal Deposit Insurance Corp. involves their loan-modification program — protecting it is an important political agenda for their leader Sheila Bair. The FDIC will eat the foregone interest and only sell the marked-down principal amount of the loan to the buyer.
Getting the bank as a whole is a sticking point for Dune and as a result the Indy insider said they’ve been crunching numbers this week to try to get Dune to pay more for the reverse mortgage arm. The FDIC doesn’t want egg on its face if the bid is too low, leaving room for the private equity firm to profit from the flip of an asset sale after the deal is done.
According to the report, Dune’s financing for the deal would be provided by a consortium of private-equity firms led by Los Angeles-based giant Oaktree Capital Management. Oaktree, a well-known investor in distressed assets, had been among the firms that looked over IndyMac’s books in spring, when the bank was desperately seeking a cash infusion.
I’ve always thought someone would buy the whole bank and then try and sell off Financial Freedom on its own to get the most value out of the reverse mortgage lender. Even though Financial Freedom has seen many of its employees join other lenders, the company is still the 2nd largest retail originator of reverse mortgages. The fact that there volume is down almost 50% YTD, yet they still hold the #2 spot is impressive and shows there is value in the company.
It looks like the FDIC understands that…