New Owner Seeks Help with IndyMac's S&D Servicing

Washington-Now that Dune Capital and its partners have agreed to buy IndyMac and its $180 billion servicing portfolio from the government, it is already engaging in talks with 'scratch and dent' subservicers to take over some of the heavy lifting on the thrift's most problematic loans, industry sources told National Mortgage News.

One firm Dune Capital has talked to is Select Portfolio Services of Salt Lake City, formerly known as Fairbanks Capital Corp., according to officials familiar with matter.

"Dune is looking to off-load some of the servicing to them," said an executive who plays in the scratch and dent market. Another source said representatives from the Dune investor group have been talking to SPS since November.

It is unclear whether using a subservicer to handle problem loans would affect the FDIC's streamlined loan modification program, which the agency launched at IndyMac in the fall.

To date, FDIC has completed 8,512 modifications at the thrift and if Dune wants to be part of a loss-sharing arrangement with the agency on certain assets it must maintain the program.

Both Dune and SPS officials did not return telephone calls last week. It is unclear how much of troubled servicing might be outsourced but it could be a portfolio as large as $8 billion.

In early January the FDIC announced it had struck a deal to sell the Pasadena-based IndyMac to IMB Management Holdings, a consortium of hedge funds led by Dune Capital, J.C. Flowers, Paulson & Co., and others.

Besides the mortgage servicing platform, IndyMac has $13.9 billion in assets, $12.3 billion in liabilities, and 33 deposit gathering branches, most of which are located in the Los Angeles area.

The hedge funds are putting roughly $2.9 billion into the deal: $1.6 billion that represents the difference between the thrift's liabilities and the value of its assets (after the assets have been marked-to-market) and another $1.3 billion in cash that will be used to capitalize the lender. Roughly 50 investors received confidential bid packages on IndyMac Bank, a depository that is also the nation's ninth largest residential servicer.

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