As of October 30, the U.S. Department of the Treasury, with input from bank regulatory agencies including the Federal Deposit Insurance Corporation (FDIC), appears to be working on a program whereby the government will guarantee modified mortgages that would otherwise be at risk of foreclosure.
According to published reports regarding the proposal, one possible version of the program would cover up to 3 million homeowners in danger of foreclosure and would utilize between $40 billion and $50 billion of the recently passed $700 billion economic bailout package. The program could include loan modification provisions that could lower affected homeowners’ interest rates for 5 years. The government could agree to share a portion of any losses associated with modified mortgages offered by lenders.
According to reports, this program is one of several ideas being considered to assist homeowners facing foreclosure. The timing of the announcement of a final proposal remains unclear.