Questions About IndyMac’s Loan Modification Experiment

I wanted to get this up last night and ran out of time. Housing Wire has a good short article calling into serious question the statistics being put forth by the FDIC with respect to its aggressive loan modification experiment at IndyMac.

You no doubt have see Sheil Bair, the Chairwoman of the FDIC, stumping for aggressive government supported loan modifications and even going so far as to have dismissed as insufficient the recently announced modification program of Fannie and Freddie. She continues to trumpet the plan she put in place at the failed IndyMac Bank. Ms. Bair was last seen before a Congressional committee reporting that of 40,000 eligible borrowers, over 5,000 had their loans modified.

The article properly points out that the FDIC has failed to provide any information that would permit a realistic assessment of the success or failure of the program. They have never disclosed, despite a request for the information, how many loan mods were done prior to the FDIC seizure of the institution. Hence there is no benchmark, no way to know how many of the 5,000 loan modifications occurred on their watch and how many occurred prior to their involvement.

You will want to read the entire article to find some other interesting data points, such as the fact that 25% of the modifications for the entire portfolio were delinquent after just on post-modification payment. Ms. Bair and the rest of the establishment seem to believe that they have a blank check to pursue their individual projects without the need to justify their efficacy.

Tom Lindmark

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