The board of directors of the Federal Deposit Insurance Corporation (FDIC) voted to amend the restoration plan for the Deposit Insurance Fund (DIF) and adopt as of June 30, 2009, an interim rule that imposes a 20 basis point emergency special assessment on all insured depository institutions.

The amended restoration plan was complemented by a final rule that sets assessment rates and enhances how the assessment system distinguishes risk. Most banks are currently in the best risk category and pay for insurance anywhere from 12 cents per $100 of deposits to 14 cents per $100 of deposits. Under the final rule, which will begin April 1, 2009, banks in this category will pay annually an initial base rate ranging from 12 cents per $100 of deposits to 16 cents per $100 of deposits.

The board also adopted an interim rule, which will begin June 30, 2009, imposing an emergency special assessment of up to 20 basis points on all insured depository institutions. The special assessment will be collected September 30, 2009, when risk-based assessments are collected for second quarter 2009. Comments on the interim rule on special assessments are due within 30 days of publication in the Federal Register. Final rules and implementation could be substantially different than the interim rules and guidelines.

The “Making Home Affordable” Loan Modification Program

The U.S. Department of Treasury issued guidelines for a loan modification program that reduces monthly mortgage payments to help at-risk homeowners avoid foreclosure. The program guidelines are expected to become standard industry practice for pursuing affordable and sustainable mortgage modifications. The program encourages alternatives to foreclosures on owner-occupied residential properties. Servicers and holders of eligible residential mortgages are provided incentives to modify loans at risk for foreclosure. These incentives should help make loan modifications affordable and more appealing than foreclosure. The program also provides incentives for homeowners to remain current on their mortgages after modification. Under the modification program, servicers can immediately begin to modify eligible mortgages so at-risk homeowners can better afford their payments. The federal bank, thrift and credit union regulatory agencies encourage all federally regulated financial institutions that service or hold residential mortgage loans to participate in the program.

Additional information about the guidelines may be found at http://www.treasury.gov/press/releases/reports/modification_program_guidelines.pdf