Committee Chairman Barney Frank of Massachusetts has said the bill, the Housing Stabilization and Homeownership Retention Act, could be up for a vote by the House as early as next week.
Under the bill approved today, a voluntary program would be created that would allow the Federal Housing Administration (FHA) to insure up to 300 bln usd worth of refinanced mortgages. Mortgages eligible under the program would be those that mortgage holders are willing to write down so struggling borrowers can avoid foreclosure and instead make smaller mortgage payments.
The program would hinge on the willingness of mortgage servicers and investors to agree to restructure troubled loans, as well as to pay the financing cost of making the federal loans.
“Only the federal government is in a position to help arrest the downward cycle in housing markets by facilitating temporary aid to borrowers facing financial difficulty and encouraging widespread restructuring of unaffordable mortgages,” the FDIC said in a document outlining the plan.
FDIC Chairman Sheila Bair, in a conference call with reporters, acknowledged that servicing firms would receive some benefit through the program. She noted, however, that those firms would be required to cover the financing costs and would have to subordinate their claims to the federal government if they choose to take part in the program.
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Democratic senators have said they support this type of legislation, and Senate Banking Committee Chairman Christopher Dodd of Connecticut has said he would like to see a 400 bln usd program.
Treasury Spokeswoman Brookly McLaughlin this week declined to say if Treasury supports or opposes Bair’s suggestion, but did say there are other housing priorities right now.
‘We’ll take a look at any proposals, but we think the focus right now should be on getting FHA modernization and GSE reform legislation across the finish line,’ McLaughlin said.
finally an attempt at a solution and not retribution….. it is important to stop the bleeding as quick as possible to move forward.
i have been trying to get help with chase and gmac and neither
one of them want to here anything.