FDIC Chairman Sheila Bair has long supported the idea of modifying as many distressed mortgages as possible to relieve the current foreclosure crisis. Since her agency took over IndyMac — a big home mortgage lender — she has had the challenge of actually doing what she had been urging others to do. Bair reported on her efforts at a recent House Financial Services Committee meeting.

Bair reported that her agency’s efforts to modify mortgages are going well. “These efforts have prevented many foreclosures that would have been costly to the FDIC and to investors,” she told the committee.

The FDIC holds about 742,000 mortgages in its role as IndyMac’s conservator. That includes 60,000 loans that are in foreclosure or at least 60 days past due. Of the 60,000 delinquent mortgages, she calculates that about 40,000 will qualify for the FDIC’s loan modification program.

At the same hearing, Committee Chairman Barney Frank (D-Mass.) expressed interest in clearing away the legal and accounting problems that mortgage servicers sometimes encounter when they try to renegotiate or modify loans. “It does seem to me as a matter of public policy that [a mortgage servicer] ought to have the same flexibility as the owner” of a mortgage, Frank said.

Also, HUD officials testified that they will be able to implement the new foreclosure-prevention program Congress enacted in the recent housing legislation. The program is supposed to get under way October 1 — a deadline HUD says it will meet.