Feds Delay IndyMac Foreclosures
Bad news at the failed IndyMac bank is apparently good news for at least some of its struggling mortgage borrowers.
The Federal Deposit Insurance Corp., which has taken over IndyMac’s operations and opened the bank under federal oversight today, is temporarily halting the foreclosure proceedings on past-due loans within its $200 million mortgage servicing portfolio, reports Reuters.
The FDIC apparently intends to seek workout arrangements with delinquent borrowers, if possible, according to FDIC Chairman Sheila Bair. “Modified loans will be worth more than foreclosed loans,” she told the CNBC television network, according to the news agency.
The most recent developments in the mortgage crisis also include concerns about the liquidity of Fannie Mae and Freddie Mac, as well as worries that other midsize regional banks could fail. The situation is virtually certain to result in greater federal regulation of banks and mortgage lending, reports the Christian Science Monitor.
“There’s no question in my mind that this crisis will be much worse than the S&L crisis,” says Kenneth Thomas of the University of Pennsylvania’s Wharton School, referring to the savings and loan meltdown of the 1980s. Hence, the government, he says, “will have to play a bigger role.”
