Loan Modification Program for Distressed Indymac Mortgage Loans

[Moe Bedard]

Loan Modification Program for Distressed Indymac Mortgage Loans

IndyMac Federal Bank, FSB (“Indymac Federal”) will implement a new program to systematically modify troubled mortgages. The program is designed to achieve affordable and sustainable mortgage payments for borrowers and increase the value of distressed mortgages by rehabilitating them into performing loans. This in turn will maximize value for the FDIC, as well as improve returns to the creditors of the former IndyMac Bank and to investors in those mortgages. The new program will help IndyMac Federal improve its mortgage portfolio and servicing by modifying troubled mortgages, where appropriate, into performing mortgages.
Below are some questions and answers regarding the program:

What loans are eligible?
What is the timeline for rollout of offers?
How will you determine which loans receive modification proposals first?
What modification options will be available to borrowers?
How does the IndyMac Federal determine whether the modified mortgage is affordable to the borrower?
How do borrowers apply for the program?
Where should borrowers interested in the program call to apply?

What loans are eligible?

The streamlined loan modifications will be available for most borrowers who have a first mortgage owned or securitized and serviced by IndyMac Federal where the borrower is seriously delinquent or in default. IndyMac Federal also will seek to work with others who are unable to pay their mortgages due to payment resets or changes in the borrowers’ repayment capacities. This streamlined approach applies only to mortgages for the borrower’s primary residence. As with all modifications, borrowers will have to demonstrate their financial hardship by documenting their income.

The goal of this streamlined loan modification program is to achieve improved value for IndyMac Federal by turning troubled loans into performing loans and, thereby, avoiding unnecessary and costly foreclosures. Accomplishing this goal will reduce the costs to the FDIC of
the failure of IndyMac Bank and provide improved returns to investors in securitized mortgages.

Some mortgages serviced by IndyMac Federal are subject to additional contractual terms governing loan modifications. While additional steps are necessary to comply with those contracts, IndyMac Federal will work to expedite approvals for modifications to help eligible homeowners keep their homes.

IndyMac Federal will only make modification offers to borrowers where doing so will achieve an improved value for IndyMac Federal or for investors in securitized or whole loans. Modification offers will be provided consistent with agreements governing servicing for loans serviced by IndyMac Federal for others. The modification program does not guarantee a modification offer for IndyMac Federal borrowers.

What is the timeline for rollout of offers?

Proposed modification terms already are being sent to IndyMac Federal borrowers based on information provided by the borrowers. Several thousand modification offers will be sent by the end of this week and we will continue to reach out to many more distressed borrowers in the coming weeks. Once the borrower signs the agreement and sends a check for their new mortgage payment, along with the information necessary to verify income, IndyMac Federal will promptly finalize the modification once it verifies that the borrower’s income matches the specific modification offer. Borrowers who have not been contacted by IndyMac Federal with a modification offer, but who are experiencing financial hardship and are falling behind on their mortgage payments should contact the bank to inquire whether they may be eligible for a loan modification that could help them keep their home.

How will you determine which loans receive modification proposals first?

IndyMac Federal is focusing on mortgages that are now seriously delinquent or in default in order to prevent further losses on those mortgages and to avoid unnecessary and costly foreclosures. Borrowers who have not been contacted by IndyMac Federal with a modification offer, but who are experiencing financial hardship and are falling behind on their mortgage payments should contact the bank to inquire whether they may be eligible for a loan modification that could help them keep their home.

What modification options will be available to borrowers?

Under the IndyMac Federal program, eligible mortgages would be modified into sustainable mortgages permanently capped at the current Freddie Mac survey rate for conforming mortgages (now about 6.5%). Modifications would be designed to achieve sustainable payments at a 38 percent debt-to-income (DTI) ratio of principal, interest, taxes and insurance. To reach this metric for affordable payments, modifications could adopt a combination of interest rate reductions, extended amortization, and principal forbearance.

If, consistent with maximizing the net present value of the mortgage, an interest rate reduction below the current Freddie Mac survey rate is necessary to achieve a 38% DTI, then IndyMac Federal could reduce the rate further for five years. After five years, the interest rate would increase by no more than 1% per year until it capped at the Freddie Mac survey rate where it would remain for the balance of the loan term. Other modification features could be combined with an interest rate reduction, as necessary and consistent with maximizing the value of the mortgage, to achieve sustainable payments.

It is important to remember that there are no fees or other charges for this modification. All unpaid late charges will be waived.

How does IndyMac Federal determine whether the modified mortgage is affordable to the borrower?

IndyMac Federal determines whether a modification proposal is affordable based on income information received from the borrower. Modifications would be designed to achieve sustainable payments at a 38 percent housing debt-to-income (DTI) ratio of principal, interest, taxes and insurance. To reach this metric for affordable payments, modifications could adopt a combination of interest rate reductions, extended amortization, and/or principal forbearance.

How do borrowers apply for the program?

Thousands of delinquent borrowers will be receiving proposed offers for a loan modification in the coming weeks. These offers are based on current income information provided by the borrowers. Borrowers also may call 1-800-781-7399 to talk with an IndyMac Federal customer service specialist and find out if they may qualify for a loan modification under this program or alternatives that may help them keep their home. Once a borrower has provided financial information to an IndyMac Federal customer service representative, IndyMac Federal will evaluate whether a loan modification may be available and, if so, provide a proposed offer to the borrower by mail.

Once a borrower has received a proposed modification offer, all it takes for them to bring their mortgage current and qualify for a final modified mortgage is to

1. sign and return the enclosed Modification Agreement along with a check for their modified monthly mortgage payment and
2. provide verification of their income to confirm that they qualify for the proposed modification.

The borrower must then continue to make timely payments at the modified monthly payment amount and comply with all other terms of their mortgage agreements. If the borrower’s verified income information demonstrates that they do not qualify for the proposed modification, IndyMac Federal will contact them to discuss alternatives that may help them keep their home.

Where should borrowers interested in the program call to apply?

Borrowers who are delinquent or who are experiencing financial hardship and are falling behind on their IndyMac Federal mortgage should call 1-800-781-7399 to speak with an IndyMac Federal customer service representative. They may also visit the FDIC website (www.fdic.gov) or the IndyMac Federal website (www.imb.com) to find out more about the loan modification program.


For further information on Indymac Federal please visit: http://www.fdic.gov/bank/individual/failed/IndyMac.html

Remarks by FDIC Chairman Sheila C. Bair on the IndyMac Loan Modification Announcement: http://www.fdic.gov/news/news/speeches/chairman/spaug2008.html

[Moe Bedard]

Remarks by FDIC Chairman Sheila C. Bair on the IndyMac Loan Modification Announcement
August 20, 2008

Good afternoon, thank you for taking the time to participate in this conference call. I would recognize John Bovenzi with IndyMac Federal, who is also on the line, and thank him for his contributions to today's important announcement. John will provide brief remarks following mine.

I am pleased today to announce the implementation of a systematic loan modification program for troubled residential borrowers who have mortgages owned or serviced by IndyMac.

Proposed modification terms will be sent out to an estimated 4,000 IndyMac Federal borrowers based on information provided by the borrowers. Several thousand more proposals will be sent out in the coming weeks. I encourage borrowers to respond to these letters.

As I will briefly explain, this is a well balanced program that will maximize the value of these loans, ultimately returning more money to uninsured depositors and creditors, along with investors in the servicing portfolio.

At the same time, we hope to keep tens of thousands of troubled borrowers in their homes and avoid the negative consequences that foreclosures can have on the broader economy. Foreclosure is often a lengthy, costly and destructive process. Avoiding foreclosure not only strengthens local neighborhoods where foreclosures are already driving down property values, it makes good business sense.

By providing long-term sustainable payments, this program will reduce future defaults, improve the value of the mortgages, and cut servicing costs.

Our goal is to get the greatest recovery possible on loans in default or in danger of default, while helping troubled borrowers remain in their homes.
Let me run through the highlights of this program. We will have staff on hand to answer technical questions following John's remarks.

Under the IndyMac program, eligible mortgages will be modified into sustainable mortgages permanently capped at the current Freddie Mac survey rate for conforming mortgages which is currently about 6.5%. Modifications are designed to achieve sustainable payments at a 38% debt-to-income (DTI) ratio of principal, interest, taxes and insurance. To reach this metric for affordable payments, modifications could adopt a combination of interest rate reductions, extended amortization, and principal forbearance.

Eligibility for the streamlined loan modification will be available for most borrowers who have a first mortgage on their primary residence which is owned or securitized and serviced by IndyMac Federal Bank FSB. We will initially target borrowers who are seriously delinquent or in default.

IndyMac Federal also will seek to work with others who are unable to pay their mortgages due to upcoming payment resets or other reasons.
As many of you know, I have been a consistent advocate for systematic loan modifications. A streamlined process that is consistently applied can maximize resources and work through many more troubled mortgages rather than on a case by case basis.

By turning troubled loans into performing loans, we enhance their overall value. Indeed, recent statistics reinforce this long standing conclusion. Over the past few years, FDIC sales of nonperforming loans have yielded about 32% of their book value, while sales of performing loans have produced returns of more than 87%.

As far back as the 1980s, the FDIC applied workout procedures for troubled loans out of bank failures, modifying loans to make them affordable and to turn nonperforming into performing loans.

I look forward to continuing to implement this program and ensuring that it is carried out consistent with our goals. We have modeled this initiative off of the best industry and sound banking policy practices in the marketplace.

It is my hope that this program will serve as a further catalyst to promote more loan modifications for troubled borrowers throughout the country. I will now turn it over to John Bovenzi, Chief Executive Officer of IndyMac Federal.

FDIC: Speeches & Testimony - 8/20/2008

[colahhh08]

It sounds like this is good news for us Indy customers. After all the comments Ms. Bair made about the mortgage crisis and steps that should be taken prior to taking over Indy this was almost inevitable, or there would have been egg on her face big time!!

We will keep you updated on our situation with Indy in the coming weeks.

[angel83]

I think this is indeed fantastic news! Fingers and toes crossed.

[michaela54]

Todays date 12/29/2008 Spent over an hour on the phone with an Indymac Bank rep from the Loan Resolution Dept. I have been told my house is in advanced foreclosure. The only way out iswith a Balloon repayment plan. According to Chuck the investroe the service the loan for does not offer any loan modifications. When the payment plan is all said and done June 2009 I will have forked over close to sixteen thousand dollars in five months. Where is the help in that. By June my final payment will be smaller and in July I will be back to my original sixteen hundred a month payment. What I do not understands is why if my arrears is only five thousand dollars why I they taking so much money every month. This is Indy Now the the other issue is there any way to find out if they are being honest with me about the investestor that they are servicing for who that is and why no loan mods. I am upside down by about thirty five thousand dollars. The neighborhood is filled with foreclosures depressing my property values. Help anyone...any answers will be appreciated.

[Moe Bedard]

Hi michaela54,

Welcome to the forum and thank you for joining..............

IndyMac is currently going through some changes with an investor pool buying the bank............and because this is very new.........we do not have any information yet on what that would mean to the loans that are being serviced by them.

You may want to contact NACA and see if they are able to help you with the modification process...........
https://www.naca.com/refinance/refinanceTenStep.jsp

[michaela54]

Thank you *** what is NACA?

[Moe Bedard]

click on the link.........they are a non profit that assists homeowners.

[melaniejp]

My name is Mel .. I am now 3mths behind on my mortg. 1st & 2nd and have just received a default notice (notice of intention to foreclose) I have been trying to get a loan mod with INDY MAC Bank. I have also spoken with a 995 Hope counselor who stated 1/5/09 they sent a recommendation to INDY for a loan mod. When I called my bank they state they have no record and offered a conditional forebearance. The payments are the same but at the end of the 4th month it would be a balloon payment of close to $10k..
I have to give them an answer to today about accepting a verbal agreement. Is this something I should do. Or try to still get a loan mod... I get nowhere when I call INDY MAC and get different answers from each person I talk to in the LOSS MITIGATION DEPT.
Help!
Thanks
Mel

[michaela54]

Hi Mel I too was in the same position. I have hired an attorney I live in S FL the homstead protects your home in BK I am filing a BK 13 this will protect the home from foreclosure and we will be eliminating the second mortgage. That is all we can do right now. We are hoping and praying the cram down bill will pass. If that goes into law the BK judge will have the power to force the mortgage servicer to modify the loan its interest and return it to it original principle. Unfortunatley this bill is still in limbo. I am sorry if I have not been more help. I know exactly what you are going through. Hang in there. This site is also comforting although NACA was no help to me either.

[melaniejp]

Forgive my ignorance, what is the "homestead' & "BK13". Do you think hiring an atty has helped?
Thanks
Melanie in NJ (Mel)

[michaela54]

Homestead is what protects your home in south FL We have homestead laws and tax exemptions. BK is for Bankruptcy and we are filing a Chapter 13. Sorry for the short cut lingo. Also go to the BK threads on this site. There will be more info there for you. Also call an attorney today.

[nita33]

GreenTree Servicing is our lender.

[pamelabe]

Mel, Can you explain the investor pool? I was told by IMB/OWB that my loan could in no way be modified because my investor (Wells) does not allow the pool of loans mine is in to be modified in any way shape or form. The investor has apprx 11 of these pools and it has to do with credit backed securities in which this group of loans was purchased which doesnt allow them to be modified. Can you explain this??

[mokulele]

I just received a loan modification offer from Indymac, but I am concerned because my loan is over the $729,250 cut off for the federally funded programs. The modification department at Indymac tells me that the amount was recently raised to $1,000,000. Is this a scam? Because every phone call I make to HopeNow and MakingHomesAffordable, and websites for government agencies that I check, as of today, still say it is $729,250. I only have a limited time to reply to this trial offer, but don't want to send them more money if I'm going to have to walk away 3 months down the road. I am also concerned because I was told by the loan mod people at Indymac that my investor was private, and I did hear the name Deutsche Bank at one point, but I'm not sure if they are the investor. Everything I read in this forum says that DeutscheBank does not do loan mods... HELP!

[mokulele]

I just received a loan modification offer from Indymac, but I am concerned because my loan is over the $729,250 cut off for the federally funded programs. The modification department at Indymac tells me that the amount was recently raised to $1,000,000. Is this a scam? Because every phone call I make to HopeNow and MakingHomesAffordable, and websites for government agencies that I check, as of today, still say it is $729,250. I only have a limited time to reply to this trial offer, but don't want to send them more money if I'm going to have to walk away 3 months down the road. I am also concerned because I was told by the loan mod people at Indymac that my investor was private, and I did hear the name Deutsche Bank at one point, but I'm not sure if they are the investor. Everything I read in this forum says that DeutscheBank does not do loan mods... HELP!

[IndyMacvictim]

Please do your homework on this lender, sir. They are the author of lies and have no interest whatsoever in helping homeowners save their homes. They're unlawful, deceptive thieves. I am living proof. Barely living, that is...

[mokulele]

Thanks for the reply. I have been working on this modification for a year, and have been researching alot. So now you have me worried. I just found this website... Can you tell me a little more about what happened to you and why your are calling them theives and saying that you are barely alive? I would appreciate any help or experiences you could share. I have to make some decisions and act by this Monday... THANKS

[IndyMacvictim]

Can you view my other post from today? They have placed my home into foreclosure yet I was never once late on any payment. That's the latest. My initial complaint can be viewed on www.consumeraffairs.com (from last March, type keyword IndyMac and scroll to Theresa from Vero Beach, FL) You will first see dozens of other mistreated homeowners stories. There is bonafide fraud working behind the scenes there. I will be glad to forward you the sickening details of my entire story if you'd like to reply to my email theresatravels@hotmail.com. Meanwhile, view www.pissedconsumer.com www.onewestbankisevil.com, etc. READ your @$$ off...then locate a good foreclosure defense attorney whom you will likely end up needing.