FDIC cleaning house
In May 2011, the Federal Deposit Insurance Company’s (FDIC’s) started cleaning house and filing lawsuits. They filed against CoreLogic for $129 million alleging faulty appraisals provided to Washington Mutual Bank (WaMu) which the FDIC seized in 2008 prior to facilitating its sale to JPMorgan Chase.
CoreLogic’s competitor Lender Processing Services (LPS) was filed against by the FDIC for $154.5 million alleging negligence and breaches of contract leading to WaMu losses.
IndyMac CEO sued for $600 million
With the sizable organizations of LPS and CoreLogic being sued for $129 million and $154.5 million respectively, $600 million sounds drastic in comparison, but that is the amount named in the suit filed in the Central District of California District Court by the FDIC against former IndyMac CEO Michael Perry.
The FDIC has deemed that one person is nearly six times more financially responsible than alleged fraud that is being pointed to by some analysts as the source of the mortgage crash.
The suit cites damages of $600 for the sale of toxic mortgages as Perry allegedly knew the secondary mortgage marketplace was unstable yet allowed IndyMac to “generate and purchase approximately $10 billion in loans for sale” in the secondary market.
The bank was incapable of selling the loans, adding more than $600 million in losses which is the source of the suit amount, according to the FDIC.
IndyMac, formerly Countrywide Mortgage
IndyMac Bank was founded as Countrywide Mortgage Investment in 1985 by David S. Loeb and Angelo Mozilo until 1997 when IndyMac became its own company run by Perry since its founding. IndyMac was known as the largest supplier of stated-income home loans.
Ultimately, it was shut down by the FDIC three years ago this month, closing with $13 billion in losses. The FDIC beared most of the losses which is why they are seeking a nearly unprecedented recovery amount from any executive. Perry’s lawyers maintain his innocence.
Now, the bank is operating and turning a profit as OneWest Bank and is being run by hedge fund billionaires.