By Amy Wyeth
Banker & Tradesman Reporter

IndyMac Federal Bank, FSB, will implement a new program to systematically modify troubled mortgages starting this week. 

The Federal Deposit Insurance Corp., which took over the California-based bank in July, will send out 4,000 modification proposals to borrowers this week, and up to 20,000 additional proposals in the coming weeks, spokesman Andrew Gray said. 

Under the IndyMac Federal program, eligible mortgages will be modified into sustainable mortgages permanently capped at the current Freddie Mac 30-year conforming fixed-rate loan interest rate of 6.5 percent. Modifications will be designed to achieve payments a borrower can sustain at a 38 percent debt-to-income ratio of principal, interest, taxes and insurance. 

Not all borrowers will receive proposals. They will only be made if the new loan terms will be a better value than alternative options for the bank or investors. Borrowers must also meet eligibility requirements, including an ability to repay the modified loan.

Gray said IndyMac has 60,000 delinquent loans nationally. He said most of the loans are in California, Florida, Nevada and the industrial Midwest.