Aug. 20 (Bloomberg) -- The Federal Deposit Insurance Corp. may lower mortgage interest rates for delinquent IndyMac Federal Bank FSB borrowers after suspending foreclosures on $15 billion in loans it's managing as successor to the failed lender.

The FDIC, which is running IndyMac while seeking a buyer, may also extend repayment terms or base payments on reduced principal to help borrowers, FDIC Chairman Sheila Bair said today in a conference call with reporters. The program might serve as a ``catalyst to promote more loan modifications for troubled borrowers throughout the country,'' Bair said.

``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,'' she said.

Bair has led regulators in pressing mortgage-servicing companies to modify loans amid rising foreclosures in the worst housing slump since the 1930s. IndyMac Federal has about 740,000 mortgages that it owns or services for other companies, the FDIC said.

The FDIC, a Washington-based agency that insures deposits at U.S. banks, took over Pasadena, California-based IndyMac Bancorp Inc. on July 11, making it the third-largest federally insured bank to be seized by federal regulators. Bair said July 14 the agency would halt foreclosures to weigh modifications.

`Maximize the Value'

The program announced today ``will maximize the value of these loans, ultimately returning more money to uninsured depositors and creditors, along with investors in the servicing portfolio,'' Bair said. The world's largest banks and investment firms have reported $503.8 billion in writedowns and credit losses on securities tied to mortgages since the start of 2007.

The modifications will aim to make monthly payments more affordable by cutting homeowners' debt to no more than 38 percent of income. IndyMac will send modification proposals to about 4,000 borrowers this week, according to the FDIC. About 25,000 homeowners will get offers over the next several weeks.

Borrowers will be eligible for the program if they have a first mortgage serviced by IndyMac and are ``seriously delinquent'' or in default, the FDIC said. The program is aimed at borrowers with Alt-A mortgages, which don't require borrowers to provide proof of income. Borrowers will have to provide documents verifying their incomes to have their loans modified.

If the plan works, it will help the FDIC sell the bank by reducing foreclosures, said Jim Carr, chief operating officer at the National Community Reinvestment Coalition in Washington.

The FDIC plan appears to go further than industry-led efforts, which ``weren't substantial enough'' to stem foreclosures, Carr said

``I don't see much of an impact because a lot of this is what the industry is doing,'' said Jay Brinkmann, financial economist at the Washington-based Mortgage Bankers Association.

Delaying Foreclosures

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.

``It hurts the bondholders that are off any shelf of any bank that is perceived as weak and potentially seizure bait, because the collateral is now in question,'' Mann said.

U.S. bank repossessions in July almost tripled from a year earlier as foreclosure filings increased 55 percent, RealtyTrac Inc. said in an Aug. 14 report.

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net.

Last Updated: August 20, 2008 17:19 EDT