The Federal Deposit Insurance Corp. said Thursday that it would offer mortgage servicers a tool kit for streamlining loan modifications modeled after the one the agency has been applying to loans it assumed after the IndyMac Bancorp Inc. collapse.
The goal is to help servicers in securing borrowers at risk of foreclosure into sustainable loans in a systematic way.
Under the terms of FDIC's "mod in box," borrowers would receive a modification that would make their debt-to-income ratio between 31% and 38% through interest rate reductions, amortization term extensions, and possible principal deferments.
Since taking over IndyMac, the FDIC has modified 5,300 loans, with thousands more in the queue, and it has reached out to 23,000 borrowers.
"I would encourage all industry participants to adopt the FDIC Loan Modification Program as the standard approach in dealing with the grave problems facing us with continued mounting foreclosures," FDIC Chairman Sheila Bair said in a press release.