Typically, banks and mortgage lenders will allow borrowers to verify assets by providing bank statements or a Verification of Deposit, but it appears the latter method is likely leading to a higher level of mortgage fraud, as it can be easily manipulated.
Effective 5:00 p.m. today, the Pasadena-based mortgage lender will now require two months of bank statements for asset documentation.
The company will also be eliminating the use of a Verification of Employment in lieu of W-2’s and/or tax returns for full-documentation loans.
Some lenders allow a borrower’s employer to fill out a form proving job title and income, but these too are highly susceptible to fraud.
In recent months, IndyMac has tightened underwriting guidelines in a number of areas, eliminating all “No Ratio” and “NINA” products across the board, and limiting “Stated income” on jumbo loans to 75% max loan-to-value.
The bank also said in mid-December that it would dump its hybrid option-arm loan program.
The changes come as delinquencies continue to rise in IndyMac’s loan portfolio, according to financial results revealed last week.
The company said 30+ day delinquencies in its prime first-lien loans (which account for 93.5% of the total servicing portfolio) increased from 5.80% in October to 6.25% in November.
And subprime 30+ day delinquencies rose to 26.87% in November, compared to 24.43% in October, though subprime loans comprise of only 2.8% of their total servicing portfolio, and have since been completely discontinued.
It is believed that an official guideline bulletin regarding the changes will be released tomorrow.