Banking Law
FDIC Details Rescue Plan for Homeowners With IndyMac Mortgages
Posted Aug 20, 2008, 02:23 pm CDT
By Martha Neil
In a move that could serve as a model for other troubled banks and homeowners struggling to make their mortgage payments, the FDIC announced a plan today to allow delinquent IndyMac Federal Bank borrowers to switch to fixed-rate loans.
Seriously delinquent homeowners who can document financial hardship and, apparently, the income to put their new mortgage payments within a 38 percent debt-to-income ratio, will be able to refinance at a fixed rate capped at about 6.5 percent, according to the Associated Press.
This “streamlined loan modification plan” announced today by the Federal Deposit Insurance Corp., which has been operating the bank since it failed last month, applies only to mortgages on owner-occupied primary residences.
The plan has two goals: helping homeowners avert foreclosure and "increasing the value of IndyMac in the eyes of a potential buyer as the FDIC seeks to sell the bank and its assets," reports the Wall Street Journal (sub. req.). "Materials provided by the FDIC make clear that the latter consideration will be paramount in their efforts to rework loans for struggling borrowers."
Related coverage:
ABAJournal.com: "Feds Probe Possible Fraud in IndyMac Bank Failure"
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