Federal officials are moving closer to a plan that would provide government guarantees for as much as $500 billion in troubled mortgages, helping millions of people stave off foreclosure.
The Treasury Department and the Federal Deposit Insurance Corp., are working on details of a plan outlined last week by FDIC Chairwoman Sheila C. Bair (pictured). The plan, which would cost $40 billion to $50 billion, would be modeled on mortgage modification programs being implemented by Bank of America Corp.’s Countrywide unit and by the FDIC for mortgages serviced by the failed IndyMac Bank.
The idea is to use loan guarantees and other enhancements to encourage lenders to modify mortgages, lowering monthly payments to a point that borrowers could afford them.
Andrew Gray, an FDIC spokesman, said the agency has had “productive conversations” with Treasury and other Bush administration officials, but it was too early to speculate about the framework or size of a potential program.
Treasury spokeswoman Jennifer Zuccarelli said, “the administration is looking at ways to reduce foreclosures, and that process is ongoing. We have not decided on a particular approach.”
-- Jim Puzzanghera
Photo credit: Bloomberg News
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