Equity Conversion Plan

The FDIC is reducing mortgage payments and interest rates for delinquent borrowers at the federally-controlled IndyMac Bank. FDIC spokesperson Shelia Bair said that the FDIC hopes to keep nearly 30,000 delinquent borrowers in their home with the changes.

Must be nice though. If you’re in trouble with your mortgage I’m sure you’re rooting for an FDIC take-over. They seem to be far more willing to work with delinquent borrowers than traditional, private servicing companies.

More from Bloomberg:

The Federal Deposit Insurance Corp. may lower mortgage interest rates for delinquent IndyMac Federal Bank FSB borrowers a month after suspending foreclosures on $15 billion in loans it’s managing as successor to a failed lender.

The FDIC, which is running IndyMac while seeking a buyer, may also extend repayment terms or base payments on reduced principal to help borrowers, FDIC Chairman Sheila Bair said today in a conference call with reporters. The program might serve as a “catalyst to promote more loan modifications for troubled borrowers throughout the country,” Bair said.

“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,” she said.

Bair has led regulators in pressing mortgage-servicing companies to modify loans amid rising foreclosures in the worst housing slump since the 1930s. IndyMac Federal has about 740,000 mortgages that it owns or services for other companies, the FDIC said. The bank services $184 billion in mortgage loans.

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Bloomberg is reporting that Lehman Brothers may take up to $4 billion in losses as a result of marking down $61 billion worth of mortgage-related assets. The losses would be announced in their 3rd quarter earnings. Lehman was the biggest underwriter of mortgage assets prior to the meltdown. They continue to be on the watch list as analysts wonder aloud if they can limit their exposure fast enough before suffering the fate of Bear Stearns.

I think we’re due to lose one more big I-Bank - and Lehman is as good a better as any.

From Bloomberg:

Lehman Brothers Holdings Inc. may write down about $4 billion in credit-related investments and other assets when it reports fiscal third-quarter earnings, JPMorgan Chase & Co. analysts said.

“The credit environment continues to be difficult,” New York-based analysts led by Kenneth Worthington wrote in a report yesterday. “It will be another difficult quarter for Lehman.”

Lehman may mark down some of its $61 billion of mortgage and other asset-backed securities after benchmark residential and commercial mortgage-related indexes declined by as much as 20 percent, the analysts wrote. The company may have already been selling some commercial mortgage assets, they added.

Lehman, the largest underwriter of mortgage bonds before the subprime market collapsed, has slumped 77 percent in New York trading as it struggles to pare its debt holdings. The bank has reported writedowns and credit losses of $8.2 billion in the past 12 months, according to data compiled by Bloomberg.

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