With the financial meltdown and the election hogging all the spot light, the troubled housing market has slipped through the cracks a bit in recent weeks. The FDIC is working on changing that.
There is a new plan near completion by the FDIC that would help protect homeowners against foreclosures, but the White House has some issues with it.
WSJ: The White House and the Federal Deposit Insurance Corp. are at odds over basic questions about the effort’s size and breadth, several government officials said. The expectation that a new president could immediately redraw the design and scope of any plan has further delayed matters.
The FDIC has been developing a proposal, which some estimate could help between two and three million homeowners, designed to encourage banks to rework troubled loans by providing a partial federal guarantee for losses on modified mortgages that meet specific criteria, people briefed on the proposal said. Under the plan, the government would cover roughly half the loss on reworked loans that went into foreclosure.
The plan would use between $40 billion and $50 billion from the government’s $700 billion financial-market rescue fund to create these loss-sharing agreements between banks and the government.
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