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IndyMac Slow in Helping Contain Foreclosed for Sale

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By : John Cutts    99 or more times read
California-based IndyMac Bank, the large subprime mortgage lender saved by the Federal Deposit Insurance Corp. in July last year, has been the target of complaints from many housing counselors, advocates and homeowners for its failure to carry out its commitment to help slow down the pace of foreclosed for sale.

As FDIC worked to restore IndyMac to profitability last year, it also launched an affordable loan modification program promoted by FDIC Chairperson Sheila Bair to help distressed IndyMac borrowers.

When a team of private investors acquired IndyMac earlier this year and renamed it OneWest Bank, they promised the FDIC to continue the bank's loan modification efforts. In return, the FDIC committed to cover most of the bank's losses in home loans.

But according to housing advocates like Alexa Milton of Acorn Housing, loan personnel at OneWest are ruder, less responsive and more difficult to work with, compared to personnel from other banks.

Advocates said that OneWest Bank should honor its loan modification commitment because it has been benefiting from a special deal with the FDIC.

In response to the complaints, OneWest stated it has been honoring its commitment to modify loans. Last week, it announced that it will also extend President Obama's Making Home Affordable Program to all of its home loans as long as they are qualified, and not only to loans guaranteed by Fannie Mae and Freddie Mac.

OneWest claimed that it has modified 3,605 home loans under the Obama program and 14,750 loans under the FDIC program and other schemes from March to July.

From September last year to February this year when IndyMac was still under FDIC supervision, a total of 16,158 home loans were modified.

OneWest reiterated that it is investing in the improvement of its servicing operations, including increasing its call center capacity and hiring more customer service personnel.

The FDIC also said it is periodically evaluating OneWest's loan modification efforts and investigating complaints about the attitudes of OneWest's representatives.

According to Michael Krimminger, liaison officer for loan modifications for FDIC, said his staff has been monitoring OneWest's modification performance.

But still, complaints against OneWest continue to arise. Shawna Nelms of the National Community Reinvestment Coalition, said her counselors have to follow up constantly on their files. Liz Caton of the Northwest Side Housing Center said OneWest sends automated modification forms to homeowners, but rejects the applications as soon as the papers are sent.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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