CALPIRG Blog

Two days ago California’s bond rating was lowered to an “A”.  Unfortunately, that’s the worst in the country—ouch.  That’s up there with the $42 billion budget gap and the crashing economy. 

Lest anyone forget where all of these economic woes started, the housing sector is still putting up record numbers of foreclosures every month (During November 2008  there were over 60,000 in California).  

Fortunately, there is a plan that is prepped and ready to go at the FDIC to drastically reduce foreclosure numbers.  It is the loan modification program they implemented at the IndyMac Bank the feds took over last year. 
The plan works like this:

-    Every loan that is defaulting is analyzed by the bank.
-    If the monthly payments can be reduced to 38 percent of the borrower’s income or less, and is still a better deal than going through the foreclosure process, the loan is modified.

Here is the link to the FDIC website where the program is outlined: http://www.fdic.gov/consumers/loans/loanmod/loanmodguide.html

So far the FDIC has successfully modified over 5,300 IndyMac loans.  We are working here in Sacramento right now to have a similar plan implemented at the state level.