The Washington Post says that the Treasury Department and the FDIC are considering a plan to guarantee millions of mortgages. According to the WaPo, the plan under consideration would encourage lenders to reduce borrowers monthly payments based on the homeowner’s ability to pay. To attract lenders into the program, the government would guarantee to repay the lender for a portion of its loss if the borrower defaulted on the reconfigured loan.
It would cost between $40 billion and $50 billion, sources said.
The program is being discussed as members of Congress are voicing frustrations that the $700 billion rescue program thusfar has been aimed at helping banks, but not homeowners.
While Treasury and FDIC officials have reached an agreement on the principles of the program, the White House is resisting, according to the sources, who declined to be identified because the negotiations are ongoing.
Treasury, FDIC Crafting Plan to Rework Millions of Mortgages [Washington Post]