The Housing Chronicles Blog: Bush Administration planning more help for homeowners

Thursday, October 23, 2008

Bush Administration planning more help for homeowners

Due to a combination of rising foreclosures and criticisms that the recent bailout packages did little to address homeowners at risk of default, the Bush Admin. is proposing more help on the way. From a New York Times story:

With foreclosures mounting, Bush administration officials said Thursday that they were preparing to step up efforts to help struggling homeowners.

A senior policy maker told a Senate committee that the administration was working on a plan under which the government would offer to shoulder some of the losses on loans that are modified.The insurance program could cost tens of billions of dollars, according to a person briefed on discussions about the plan, and would be run by the Treasury Department under the $700 billion financial rescue bill Congress passed earlier this month...

Details of the plan are expected in the next week or two. Ms. Bair told senators that policy makers were contemplating creating standardized loan modification practices that would be used by mortgage servicing firms, which handle billing and collection on behalf of investors and banks. Loans modified under those principles would qualify for a partial federal guarantee.

In other words, if homeowners defaulted on their loan again, part of the loss would be borne by the government. It was unclear whether investors or homeowners would have to pay premiums for that protection.

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