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The IndyMac Federal Bank, FDIC Program 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.
IndyMac Helpline – 1-800-781-7399
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.
Thousands of delinquent borrowers will be receiving proposed offers for a loan modification in the coming weeks and months. 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.
Contact your lender to determine eligibility. Some of the eligibility requirements for the IndyMac Federal Bank, FDIC Program are the following:
- Must be a first mortgage and must be a loan owned, or securitized and serviced by IndyMac Federal.
- The property must be the primary residence and owner occupied.
- IndyMac borrower must already be seriously delinquent or in default.
- IndyMac borrowers at risk of defualt due to payment resets or changes in the borrowers' repayment capacities.
- Modifications would be designed to achieve sustainable payments at a 38% debt-to-income (DTI) ratio of principal, interest, taxes and insurance.
If I can’t pay my mortgage, why should I call my mortgage lender/servicer?
Your mortgage lender can help you identify the options available to you, should you have trouble paying your mortgage.
When should I call my lender?
You should contact your lender as soon as you know you will have difficulty meeting your mortgage payments. You do not have to wait until your interest rate re-sets, nor do you have to wait until you are already behind in your payments. In fact, the sooner you call, the more options will be available to you. No matter what your situation is, CALL TODAY.
What if I don’t want to call my lender?
Call the Hope Now Hotline – 1-888-995-HOPE (4673). This hotline is staffed by HUD-approved credit counselors who can guide you through possible options.
How will IndyMac 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 payment.
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.
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.
What is a loan workout?
Either a loan modification or a repayment plan.
What is a loan modification?
A modification occurs any time any term of the original loan contract is permanently altered. This can involved a reduction in the interest rate, forgiveness of a portion of principal or extension of the maturity date of the loan.
What is a repayment plan?
A plan that allows the borrower to become current and catch up on missed payments that are appropriate to the borrower’s circumstances.
This program was intended to help up to 65,000 borrowers who are more than two months delinquent on their mortgages at IndyMac -- the giant failed bank taken over by the FDIC this summer. As of December 2008, this program has benefited only approximately 7,200 people.
IndyMac has responded to the criticism by saying that many of the overdue loans turned out to be ineligible for the program, and that some borrowers had not yet responded to the bank’s modification offers.
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