Defaults climb, shares slide for IndyMac, Downey and FirstFed. Investors are increasingly throwing in the towel on Southern California-based savings-and-loan mortgage lenders IndyMac Bancorp, FirstFed Financial Corp. and Downey Financial Corp.

Defaults climb, shares slide for IndyMac, Downey and FirstFed. Investors are increasingly throwing in the towel on Southern California-based savings-and-loan mortgage lenders IndyMac Bancorp, FirstFed Financial Corp. and Downey Financial Corp.

Modifying troubled mortgages increases nonperforming loans. Shares of Downey Financial Corp. tumbled 13% on Monday after a program that allows some homeowners to restructure debt boosted nonperforming loans to 7.8%.

Gerald J. Ford's Hilltop Holdings already has a 6.8% stake in Downey Financial Corp. An investment firm run by billionaire and former thrift executive Gerald J. Ford said Monday it had accumulated a 6.8% stake in Downey Financial Corp. and might want to acquire the Newport Beach-based savings and loan.

Feeling the mortgage pinch, the S & L's parent will record a quarterly deficit of $23 million. In the latest grim warning from a home lender, Newport Beach-based savings and loan operator Downey Financial Corp. said Wednesday that it would report a third-quarter loss because of California's weakening housing markets.