IndyMac Sells Retail Mortgage Branches

IndyMac Bancorp(IMB - Cramer's Take - Stockpickr) on late Tuesday said it would sell a majority of its retail mortgage branches to Prospect Mortgage, part of an effort to address its regulator's concern that it is not "well-capitalized."

Northbrook, Ill.-based Prospect will take over 750 IndyMac employees and more than 60 branches. Terms of the deal were not disclosed.

IndyMac shares plummeted 38% to 44 cents on Tuesday, after the mortgage lender on late Monday said it would stop making most new loans and would cut half of its 7,200 employees in an effort to address the capital concerns raised by the Office of Thrift Supervision.

IndyMac said while it was too early to say what its capital ratios were as of June 30, it expected its second-quarter net loss was expected to exceed its first-quarter loss of $184 million.

They Just Don't Get IndyMac!

Without raising money, which the company said it has been unsuccessful in doing, or selling significant pieces of business IndyMac will have a difficult time surviving the next several quarters. The lender's predicament portends bad news for other troubled thrifts like Washington Mutual(WM - Cramer's Take - Stockpickr) and Downey Financial(DSL - Cramer's Take - Stockpickr).

With completion of the transaction, Prospect Mortgage says it will become one of the largest independent retail mortgage companies in the country. Countrywide Financial, once the largest independent mortgage company, was swallowed by Bank of America(BAC - Cramer's Take - Stockpickr) in an all-stock transaction completed last week.

IndyMac shares were gaining 4.6% to 46 cents in recent after-hours action.