On January 6, the “Systematic Foreclosure Prevention and Mortgage Modification Act” was introduced in the House of Representatives by Representative Maxine Waters (D-CA) as H.R. 37 and in the Senate by Senator Dianne Feinstein (D-CA) as S. 73. The bills would require the Federal Deposit Insurance Corporation (FDIC) to proceed with the loss sharing plan that it had first proposed on November 13, 2008. As first reported in the November 14, 2008, edition of Corporate Financial Weekly Digest, under the loss sharing plan, the FDIC would create a systematic loan modification program in which it would pay servicers $1,000 to cover loan modification expenses and would share up to 50% of losses incurred if modified loans re-default. The program would (i) only cover owner-occupied properties, (ii) reduce the loss sharing percentage for underwater loans, (iii) involve an affordability test based on a 31% borrower mortgage debt-to-income ratio, and (iv) provide for a termination of the loss sharing guarantee after eight years.  

http://www.govtrack.us/congress/bill.xpd?bill=h111-37  

http://www.govtrack.us/congress/bill.xpd?bill=s111-73