Sunday’s revised plan calls for the Treasury to work with loan servicers to stem the tide of foreclosures, but how that will happen remains unclear.
NEW YORK (CNNMoney.com) — The revised $700 billion bailout legislation unveiled Sunday calls for the Treasury Secretary to implement a plan to stem foreclosures and to work with servicers to modify loans.
But some community advocates say the bill offers little help for struggling homeowners. They argue that the financial system, as well as the economy, cannot recover until the tide of foreclosures stops.
In particular, critics chastised lawmakers for not including a more powerful provision, which would allow bankruptcy judges to modify loans.
Since the bailout was announced a week ago, lawmakers and the Bush administration have tussled over how much to help borrowers who have fallen behind in their mortgage payments.
In Sunday’s version of the bill, federal agencies holding mortgages and mortgage securities would be required to identify loans that could be modified without causing big losses for taxpayers. However, exactly how that would be done isn’t totally clear.
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