WASHINGTON – Borrowers who have missed at least two mortgage payments could be eligible in a reduction in interest, under a proposal unveiled today by the FDIC.
The proposal, which has been supported by leading congressional Democrats but opposed by the Treasury Department, would require consumers to spend no more than 31% of their income on mortgage payments.
Under the plan, the government would pay loan servicers $1,000 to cover expenses for each loan modified and the government would guarantee half the cost if the borrower defaults.
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The FDIC estimates that the plan would save 1.5 million mortgages in the next year at a cost of $24.5 billion. But the Treasury Department has opposed using any of the funds allocated to infuse capital in financial institutions to help individuals save their homes.
Senate Banking Committee Chairman Christopher Dodd (D-Ct.) has praised the plan and also promised to introduce legislation to allow judges to change the terms of mortgages during bankruptcy proceedings, which credit unions and banks have strongly opposed.
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