The Federal Deposit Insurance Corp.'s chief watchdog recommended improvements in the agency's loan-modification program to align it more with the administration's program for workouts.

Starting with loan-modification standards implemented at the failed IndyMac Bank, the FDIC has required failed-bank acquirers to comply with the program in order to receive claims under loss-sharing deals with the agency. Generally, modifications must produce a greater value than a foreclosure would, and a monthly payment not exceeding 31% of a homeowner's gross monthly income.

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