When the Indy Mac failed to meet FDIC capital liquidity guidelines, the government agency took over and set up a loan modification program that became the basis for Obama's HAMP program.  The understaffed FDIC, while slow to process, helped modify loans to favorable terms for qualified homeowners. Like the HAMP program. Borrowers typically received a step plan that would start at a very low interest rate (1%-3%) then gradually go up over the years until it reached a low fixed interest rate. As needed the FDIC would stretch out amortizations to lower payments and capitalize delinquencies.  The model program enabled homeowners to keep their property even when they were seriously delinquent.

In 2009, the FDIC then decided to sell off the mortgage-backed securities portfolio to a company comprised of a group of well funded investment companies called IMB Management Holdings, LP, who created One West Bank.  The deal allowed IMB to purchase the $20.7 Billion dollar portfolio for $16 billion, plus the investor received a loss share agreement with the FDIC. 

The attitude and approach of One West Bank is starkly different and the formerly offered loan modification terms have become very rare.  Because One West Bank's cost in the Indy Mac assets is roughly $0.75 cents on the face value of the securities, the bank can quickly foreclose and still make a profit, even where the home is sold for about half the loan amount.  Under the agreement, the Bank receives reimbursement of 80-95% of its "losses" from the FDIC every month.  The residential loss share agreement with the FDIC practically ensures Bank One West will make money on foreclosures even in areas where home prices have crashed.  To read the the actual agreement, click http://www.fdic.gov/about/freedom/IndyMacSharedLossAgrmt.pdf.

As a result, One West Bank is aggressively foreclosing on former Indy Mac customers.   Furthermore, the bank is using questionable tactics to collect past due balances from homeowners. One West will offer a modification to a homeowner under promising terms, collect a 'Good Faith' reinstatement payment or series of trial payments, and then issue a denial of a permanent modification upon further review. This practice is becoming the norm when dealing with One West Bank and is spreading to other lenders as well.

Another addition to the One West guidelines is that anyone who is scheduled for a foreclosure sale is now is required to pay up to 50% of their delinquent balance to delay the foreclosure. The payment does not guarantee a modification or reinstatement, just a short term delay of the sale date and the possibility of a modification.

Homeowners in financial distress should seek a Plan B to loan modification if dealing with the former Indy Mac.  One West Bank has no incentive to help folks avoid foreclosure.