Federal Government May Actually Keep People In Their Homes

From recent action on Capitol Hill, it looks as though the federal government may ultimately take action to keep people in their homes. As Sam mentioned in his daily round-up (a relatively new NDN product that has become a must read in the mornings), FDIC Chariman Sheila Bair’s testimony to the Senate Banking Committee yesterday was well-received, and details of the plan are expected in weeks.

From the New York Times:

With foreclosures mounting, Bush administration officials said Thursday that they were preparing to step up efforts to help struggling homeowners.
A senior policy maker told a Senate committee that the administration was working on a plan under which the government would offer to shoulder some of the losses on loans that are modified.

The insurance program could cost tens of billions of dollars, according to a person briefed on discussions about the plan, and would be run by the Treasury Department under the $700 billion financial rescue bill Congress passed earlier this month.

The remarks about the plan, made by Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, came as a new report showed that foreclosure filings jumped 71 percent in the third quarter from a year earlier. At the hearing, Congressional Democrats criticized the administration for not doing enough to help homeowners even as the Treasury and Federal Reserve have moved to inject hundreds of billions of dollars into banks and the financial system.

Ms. Bair, who has been one of the most ardent proponents of loan modifications, acknowledged that more needed to be done. "We are behind the curve," Ms. Bair told the Senate Banking Committee. "We are falling behind. There has been some progress, but it’s not been enough, and we need to act and we need to act quickly and we need to act dramatically."

The Washington Post's front page also has coverage on the proposal. For well over a month, NDN has been arguing that the federal government must take decisive action to keep people in their homes, as stanching forecloures is a key ingedient to stopping the financial cave in. Thankfully, it finally looks as though the federal government will act. For more on the NDN Keep People in Their Homes campaign, click here.