FDIC re-writes loan terms at IndyMac

WASHINGTON, Aug. 21 (UPI) -- U.S. regulators plan to rewrite terms on about 25,000 troubled Indymac Bancorp, mortgages that could set a trend for other lenders, an official said.

Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., said she hoped steps such as cutting some rates to 3 percent for five years and stretching some mortgages to 40 years would set an example for the other banks, the Los Angeles Times reported Thursday.

On some loans, regulators are rewriting terms to charge interest on only part of the principle, the Times reported.

The FDIC, which took over the failing IndyMac Bank on July 11, plans to modify about 37 percent of the bank's most delinquent loans, the newspaper said.

Regulators had stopped foreclosure proceedings on about 40,000 loans when it took over the bank.

Bair told the Times a strong response from borrowers would help the program "become a catalyst" for the nation's troubled mortgage industry.