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FDIC HALTS FORECLOSURES ON INDYMAC MORTGAGES

August 8, 2008

Thanks to Reuters (Washington) for their coverage of this important issue.

The Federal Deposit Insurance Corp has temporarily halted any foreclosures on the $15 billion of bank-owned mortgage loans found in IndyMac’s portfolio, FDIC Chairman Sheila Bair said on Monday.

Bair has scolded mortgage lenders for being too slow to help distressed borrowers restructure their home loans.

“Modified loans will be worth more than foreclosed loans,” she said in an interview on CNBC television.

IndyMac, which the FDIC took over after it failed on Friday, had a $200 billion mortgage servicing portfolio.

Bair has repeatedly urged the mortgage industry to refinance loans rather than foreclose on properties when borrowers fall behind on their payments.

She said the “overwhelming majority” of U.S. banks are “safe and sound.”

Capital levels are strong at U.S. banks, but she warned that the industry will see the number of troubled banks and failures grow in the coming months.

“The number is going to go up,” Bair said. “Banks do fail and there’s nothing unusual about that.”

She declined to comment on a RBC Capital Markets report on Sunday that said 300 U.S. banks might fail over the next three years because of credit losses and tight capital markets.

But Bair said U.S. banks were well-positioned going into the credit crisis and will continue maintaining strong capital levels. “They’re still in a very good position to weather it.”

  (Reporting by Karey Wutkowski; Editing by Tim Dobbyn)

 

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