There was an interesting AP article today about a Senate committee meeting on the mortgage mess. The head of the FDIC said there are all kinds of creative plans in the works to try to help Americans prevent foreclosure. Here are some excerpts:
Federal regulators told Congress Thursday they’re working on a plan that could help many distressed homeowners escape foreclosure in a global financial crisis that Federal Reserve Chairman Alan Greenspan warned will get worse before it gets better. …
Neel Kashkari, who is overseeing the government’s $700 billion financial rescue effort, told the Senate Banking Committee that the new plan could include setting standards for changing mortgages to make them more affordable and giving loan guarantees to banks that meet them.
“We are passionate about doing everything we can to avoid preventable foreclosures,” he said.
Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the same Senate panel that the government needs to do more to help tens of thousands of home borrowers avert foreclosure, including setting standards for modifying mortgages into more affordable loans and providing loan guarantees to banks and other mortgage services that meet them.
“Loan guarantees could be used as an incentive for servicers to modify loans,” Bair said. “By doing so, unaffordable loans could be converted into loans that are sustainable over the long term.”
The FDIC is working “closely and creatively” with the Treasury Department on such a plan, she said.