As the economy tumbles and home foreclosures are mounting, US officials are trying to increase aid to homeowners. A senior Bush administration official was on Capitol Hill this week and told a Senate committee that they were working on a plan to help shoulder some of the losses on home loans that are modified.
The new insurance program would be run by the Treasury Department under the $700 billion financial rescue plan that Congress passed recently. Sheila Bair, the chairman of the Federal Deposit Insurance Corporation, made the remarks about the plan as news reports showed a large jump in foreclosures. In the third quarter of 2008, filings for foreclosures increased by 71 percent from the same time in 2007.
Ms. Bair told senators that they were working on the details of the plan, which are expected in the next week or two. Policy makers are considering creating standardized practices for modifying loans which would then qualify for a partial federal guarantee. This is one aspect of the rescue plan that could be used alongside direct purchases of mortgages. This approach is intended to provide an incentive to loan services to modify existing loans, which would help to ease the burden on homeowners who are struggling to make payments.
Useful Resources
