Asian Journal- The Filipino-American Community Newspaper

NEW YORK CITY - Sheila Bair, chairman of the Federal Deposit Insurance Corporation, delivered a short address on the future of mortgage financing at a conference call with consumer groups last Oct. 9 and discussed the FDIC’s updated “loan modification plan” that allowed borrowers from the failed IndyMac bank to renegotiate to lower-interest, fixed rate loans.

“Our initial targets are those who are already delinquent, those who are nearing foreclosure. We have been systematically identifying loans that are delinquent and modifying the terms for these loans,” Ms. Bair said.

According to documents obtained by the Asian Journal, the new IndyMac Federal loan modification program is “designed to increase the value of distressed mortgages by achieving affordable and sustainable mortgage payments for borrowers.”

“Converting nonperforming mortgages into stable performing mortgages will return greater value than nonperforming loans and foreclosure in today’s troubled housing market, providing a better return for the FDIC, the bank and for investors in securitized and whole mortgages,” the document explained.

Loan modifications are designed to help homeowners achieve a long-term sustainable mortgage payment.  

When a borrower receives a modification proposal, he needs to provide information to verify his income, sign the modification agreement, and begin making the modified mortgage payment.  Finalization of the modification agreement is contingent on IndyMac Federal’s verification of the borrower’s income and confirmation that he qualifies for the proposed modification.

“This modification program is designed to maximize the value of the loans and that is consistent with our legal obligations as conservator,” Ms. Bair said.

The program includes interest on past due payments, past due tax and insurance amounts, and servicing charges paid to third parties in the new principal balance.  There will be no charges or fees for the loan modification, and all unpaid late charges will be waived.

Under this program, modifications would be designed to achieve sustainable payments for the first mortgage at a 38 percent housing debt-to-income ratio (DTI), including monthly principal, interest, taxes and insurance.