FDIC Pushes Plan to Ease Mortgage Payments

Bush camp opposes using bailout funds
By Clay Dillow,  Newser Staff
Posted Nov 14, 2008 8:42 AM CST
FDIC Pushes Plan to Ease Mortgage Payments
Federal Deposit Insurance Corporation (FDIC) Chairwoman Sheila Bair has been an outspoken proponent of curbing foreclosures, and a regular critic of the Bush administration's bailout plans.   (AP Photos/Susan Walsh)

Officials at the FDIC are butting heads with the Bush administration over the bailout once again, yesterday outlining a plan to prevent 1.5 million foreclosures in the coming year by having banks sharply reduce monthly payments on mortgages, the Washington Post reports. The government would guarantee half the losses should the banks lose money on modified loans, costing an estimated $24.4 billion to the government.

The Treasury opposes taking that money from the $700 bailout, but many economists say home prices won’t stabilize until foreclosures are reduced. The FDIC program would focus on subprime borrowers who are two months behind on payments, reducing their interest rates to as low as low as 3 percent. Beyond interest rates, the program could extend loan terms or even reduce the principal to help borrowers stay ahead of payments.
(More financial crisis stories.)

Get the news faster.
Tap to install our app.
X
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.

X