In the case of IndyMac Federal Bank, it turns out the Federal Deposit Insurance Corp. was running the joint.
This may help explain why the mortgage-servicing industry got away with such misbehavior for so long. The government, in one form or another, was doing it, too.
The facts are there for anyone to see in the records of a circuit-court lawsuit against Israel and Neena Machado, a West Palm Beach, Florida, couple who last year beat back IndyMac’s attempts to foreclose on their home mortgage. They even won a judgment ordering IndyMac to pay $38,117 in legal fees.
IndyMac sued the Machados in November 2008, four months after the government closed its predecessor, Pasadena, California-based IndyMac Bank, which had $32 billion in assets when it was seized. The FDIC formed IndyMac Federal in July 2008 as the successor to the failed bank, and continued operating it in conservatorship before selling it in March 2009.
Among the sworn statements IndyMac filed with the court was a December 2008 affidavit by an IndyMac vice president, Erica Johnson-Seck, who said she had personal knowledge of the amount of money the Machados owed on the mortgage. That wasn’t true, she later testified in a deposition. To be fair, there’s every reason to believe the old IndyMac was engaged in this sort of conduct already, before it was shut down.
‘False Affidavit’
“There’s a lie in the affidavit,” the judge in the case, Meenu Sasser, said at a September 2009 court hearing, where she dismissed IndyMac’s complaint. “It’s a false affidavit.”
An FDIC spokesman, Andrew Gray, said the agency is looking into the matter. “While this issue has only recently come to our attention, it is something that the FDIC takes very seriously,” he said. “The FDIC was unaware of any violation of state laws applying to servicing practices while we were in control of IndyMac Federal. FDIC staff is currently investigating this further. We are committed to working with all parties to correct any issues or violations that may be found.”
Another point in dispute was whether IndyMac held the Machados’ mortgage note, as the bank claimed in its complaint. The Machados said it didn’t. The court never resolved the question. Whoever owns it, no one has since filed any new foreclosure action against the Machados, who continue to live in the same home, according to their attorney, Thomas Ice.
Read on.
Here is the announcement of seizure of IndyMac by Ofiice Thrift and Supervision [OTS] and the control of IndyMac to FDIC. Click here. Keep in mind that in 2009, Treasury Dept. Inspector General found that OTS failed to catch the warning signs of the IndyMac collapse. The IndyMac regulator recognized the red flag but did nothing.
Also this piece of information in 2008. LA Times:
[FDIC head Sheila]Bair last week took two unusual steps that suggest where she's focusing her gaze. On Wednesday, she publicly criticized a highly touted foreclosure prevention plan from the Treasury Department and other agencies as falling short of what's needed.
Then on Friday, Bair released details of her much more ambitious plan -- a $24.4-billion program aimed at preventing 1.5 million foreclosures -- even though Treasury Secretary Henry M. Paulson had told reporters earlier in the week that he would not pay for it.
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