FDIC, which took over IndyMac last month, has unveiled an ambitious plan this week to help thousands of troubled IndyMac borrowers repay their mortgages and stay in their homes. The FDIC will be mailing out about 25,000 loan modification proposals to borrowers whose mortgages it currently owns and services.

This plan aims to assist 37% of IndyMac’s seriously delinquent borrowers by conditionally modifying the loan into a fixed-rate mortgage with an interest rate capped at 6.5%. Once the modification offer reaches the borrower, all they need to do is sign the new agreement, send a check for their new mortgage payment, and information necessary to verify income.

“Keeping borrowers in their homes is the optimal low-cost choice,” says Sheila Bair, Chairwoman of the FDIC.

Recent FDIC research finds that sales of performing loans to outside investors recover 87 cents on every dollar, compared to 32 cents for nonperforming loans.

The large-scale nature of this new program hopefully signals a paradigm shift in the way regulators and banks assist borrowers. Analysts predict dozens of small bank failures in the next two years. If successful, this loan modification plan could be FDIC’s new strategy in the event of a similar bank takeovers.

To learn more click here and here.

A new documentary produced by the California Reinvestment Coalition (CRC) entitled “Mo’Money, Mo’Money, Mo’Money” shows how foreclosures destroy the dreams of California families and threaten the stability of small businesses, city governments, and neighborhoods.

The film reveals how this disaster could have been avoided if regulators and government officials had not ignored predatory lending practices.

California accounts for a quarter of all foreclosures in the country and seven of the state’s cities are consistently in the list of top ten foreclosure rates in the nation. Earlier this year, seven bills were introduced in the California legislature to address the mortgage foreclosure crisis. Despite strong support from community groups, the legislature only passed one meaningful bill.

To view the documentary and learn more click here.

Asset building groups have advanced over 80 positive policy changes in the last year and half, according to CFED’s Assets & Opportunity Scorecard Progress Report. These policies are bringing an additional $325 million towards asset building and asset preservation programs throughout the United States. Key policy victories include enacting state Earned Income Tax Credits, reforming asset tests for public assistance, and curbing predatory lending.

For example:

Washington became the first state without an income tax to enact a State Earned Income Tax Credit (EITC). 3 other states passed legislation also enacting a State EITC.

New Hampshire passed a bill capping interest rates for payday and title loans at 36%

California along with 7 other states significantly raised asset limits or exempted categories of assets to help more families qualify for public assistance.

9 states took up substantive mortgage lending reform bills though only 6 states successfully enacted legislation. California introduced a comprehensive package of predatory lending, foreclosure reform bills but only one (SB 1137) passed.

California asset building advocates and policy makers introduced ambitious bills earlier this year to address the foreclosures crisis, retirement savings, and financial literacy, but due to the widening $16 billion state budget deficit, all but a few bills stalled in the legislature.