China considers same tax rate for domestic, overseas firms (AFP)
AFP - Chinese lawmakers have mulled a draft law that would impose a 25 percent income tax on both domestic and foreign firms, eliminating the preferential rate for overseas companies, according to state media.
Regulator to help IndyMac mortgage borrowers (Reuters)
2008.08.21By Karey Wutkowski 4 minutes ago
WASHINGTON (Reuters) - Thousands of homeowners with distressed mortgage loans linked to failed lender IndyMac (IDMC.PK) may soon be able to avoid foreclosure under a program announced on Wednesday by U.S. banking regulators.
The Federal Deposit Insurance Corp, which seized Pasadena, California-based IndyMac on July 11 in the third-largest bank failure in U.S. history, said 4,000 mortgage modification proposals were going out this week and it hoped to send out 25,000 modification notices over the next few weeks.
"Our goal is to get the greatest recovery possible on loans in default or in danger of default, while helping troubled borrowers remain in their homes," FDIC Chairman Sheila Bair said in a statement.
IndyMac, the ninth-largest U.S. mortgage lender in 2007, according to the Inside Mortgage Finance newsletter, has about 740,000 loans that it either owns directly or it services for others in a $184 billion mortgage portfolio.
Bair has scolded banks for months to speed up loan modifications. Now the FDIC has a chance to practice what it has been preaching.
She expects most of the modified IndyMac mortgages to exceed the foreclosure value. "I hope it can serve as a model for other servicers," she said.
The modified loans will be available to most borrowers with a first mortgage either owned by, or securitized and serviced by, IndyMac. They will be available to borrowers who are seriously delinquent or in default and apply only to a borrower's primary residence.
Modified loans will be permanently capped at an interest rate of about 6.5 percent, the current Freddie Mac survey rate for conforming mortgages, but rates for many modified loans will be lower, to achieve a debt-to-income ratio of 38 percent.
Bair said foreclosure is a costly and destructive process. Modifying troubled mortgages would maximize value for the FDIC when the agency finds a buyer for IndyMac's portfolio, and improve returns for IndyMac's creditors.
Shortly after assuming control of IndyMac, the FDIC said it had temporarily halted any foreclosures on the $15 billion of bank-owned mortgage loans found in IndyMac's portfolio.
Bair told reporters that other mortgage servicers have been reluctant to roll out systematic loan modification programs because they fear investors' reactions. But she said the FDIC's IndyMac program could prove that such an approach can be valuable to all parties involved.
IndyMac was the fifth of eight banks to fail so far this year. The FDIC has said it expects IndyMac's failure will cost its $53 billion insurance fund between $4 billion and $8 billion.
Bair said she could not estimate the cost of the loan modification program, but said laws require the FDIC to take a lowest cost approach. If it is cheaper to foreclose a loan than to modify it, the FDIC is obligated to foreclose.
"In the vast majority of cases, we believe the net present value of loan modifications will exceed the foreclosure value," Bair said. "It will decrease our costs, not increase them."
(Reporting by Karey Wutkowski; Editing by Tim Dobbyn)
Top News
More articles on this topic:
China says to continue stable monetary policy (Reuters)
Reuters - China's central bank said on Monday that it would continue to take steps to keep investment and credit growth in check, while pressing ahead with efforts to make the value of its currency more market-driven.
Reuters - China's central bank said on Monday that it would continue to take steps to keep investment and credit growth in check, while pressing ahead with efforts to make the value of its currency more market-driven.
Economic growth concerns drag down indexes (Reuters)
Reuters - U.S. stocks dropped on Friday as concerns about slowing economic growth persisted, causing investors to sell shares of bellwether companies such as plane maker Boeing Co. and leaving all three major indexes in the red for the week.
Reuters - U.S. stocks dropped on Friday as concerns about slowing economic growth persisted, causing investors to sell shares of bellwether companies such as plane maker Boeing Co. and leaving all three major indexes in the red for the week.
Russia tax office files suit vs PWC on YUKOS audit (Reuters)
Reuters - Russian tax authorities have filed a suit against the local branch of PricewaterhouseCoopers (PwC) accusing it of producing a false audit for fallen oil company YUKOS, the auditor said on Monday.
Reuters - Russian tax authorities have filed a suit against the local branch of PricewaterhouseCoopers (PwC) accusing it of producing a false audit for fallen oil company YUKOS, the auditor said on Monday.
Japan keeps view that economy is recovering (Reuters)
Reuters - The Japanese government kept its assessment of the economy unchanged in a monthly report on Monday, after downgrading it for the first time in almost two years last month.
Reuters - The Japanese government kept its assessment of the economy unchanged in a monthly report on Monday, after downgrading it for the first time in almost two years last month.
