The intended impact of lowering mortgage interest rates for IndyMac borrowers who are currently delinquent:
“We hope to keep tens of thousands of troubled borrowers in their homes and avoid the negative consequences that foreclosures can have on the broader economy,” [FDIC Chairman Sheila Bair] said.
The unintended impact (and food for thought):
Bair’s efforts may lower the value of mortgage-bond holdings by delaying foreclosures until home prices are lower, said Julian Mann, a mortgage- and asset-backed bond manager at First Pacific Advisors LLC in Los Angeles, which oversees $11 billion.
∙ FDIC Will Modify Mortgages for Some IndyMac Borrowers [Bloomberg]