Indymac Sells $590 million in mortgage bonds

This is the kind of news that mortgage industry people are looking for to signal a loosening in the liquidity crisis.  I am not reading too much into this as it’s a small amount relative to what’s currently at stake.  Good borrowers are going to get loans.  Anyone who you wouldn’t want to personally loan your money to probably isn’t going to get a loan.  Those are the kinds of standards being put in place now, if it is your money, would you lend to them? Indymac Bancorp in Pasadena said that last Friday it traded $240 million of AAA bonds backed by jumbo fixed-rate home loans and $350 million of AAA bonds backed by jumbo adjustable-rate loans — the first bonds it’s traded in 36 days.    

The market for jumbo loans, which are prime loans greater than $417,000 in most states, has been rocked by a lack of investor confidence in all home loans except those with some kind of government guarantee.

Here’s more from Indymac’s blog:

While the trade prices on these sales are still outside historical ranges, they do reflect an improvement over several “fire sale” trades made by others in recent weeks. We are encouraged by these sales as they represent the first small sign that the ice is beginning to melt, and some modest liquidity is beginning to return to the private-label mortgage market. It appears as though, given the current historically wide spreads, significant tightening of underwriting standards by lenders, and the updated rating agency models requiring stronger subordination levels, investors are beginning to recognize that private mortgage-backed bonds may offer strong risk-adjusted returns. This further supports our decision last week to re-enter the prime jumbo mortgage market after a brief hiatus.