After months of sitting on the sidelines, hoping that private lenders would take advantage of government programs such as HOPE for Home Owners and the FHA Secure, the Federal Deposit Insurance Corporation (FDIC) and Sheila Bair are leading the home saving charge in Washington.

This week the FDIC has put forth a model loan modification plan they are calling “Loan Mod in a Box” that may set the standards for the mortgage servicing industry to follow.

The Program is designed to achieve affordable and sustainable mortgage payments for borrowers and increase the value of distressed mortgages by rehabilitating them into performing loans. Under the terms of the Program, borrowers receive a loan modification with a maximum 38% down to 31% housing-to-income ratio through the use of interest rate reduction, amortization term extension, and in some cases, principal deferment.

Here are some great downloads for consumers and mortgage servicers on the FDIC’s loan modification plan. The documents below are intended for mortgage servicers as a blue print during the loan workout process/ But it can also be used by homeowners to understand exactly what they use to qualify you during the loan modification process:

· Loan Modification Program Overview – PDF (PDF Help)
Includes details including the philosophy, process, and promotion of the program.

· Additional Program Tools – PDF 452K (PDF Help)
Includes marketing materials, workout program guidelines, and investor reporting tools for use in the program.

· Marketing Materials
Counseling Compensation Agreement (Word Help)

· Workout Program Guidelines
Net Present Value Worksheet (Excel Help)

· Investor Reporting
Sample Grid for Determining PSA Modification Parameters (Word Help)
Loan Modification Reporting (Excel Help)

FDIC Chairman Sheila C. Bair said, “The IndyMac loan modification framework is an effective loss mitigation strategy for both portfolio and securitized mortgages. I have long supported a systematic and streamlined approach to loan modifications to put borrowers into long-term, sustainable mortgages—achieving an improved return for bankers and investors compared to foreclosure.

Implementing widespread loan modifications based on the Program used at IndyMac will strengthen local neighborhoods where foreclosures are driving down property values and will help stabilize the broader economy. I would encourage all industry participants to adopt the FDIC Loan Modification Program as the standard approach in dealing with the grave problems facing us with continued mounting foreclosures.”

The FDIC Loan Modification Program guide is available at:

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation’s banking system. The FDIC insures deposits at the nation’s 8,451 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at, by subscription electronically (go to and may also be obtained through the FDIC’s Public Information Center (877-275-3342 or 703-562-2200). PR-121-2008

Courtesy of the FDIC