Coconut Creek Real Estate, Remax ParkCreek

Welcome to Part II of my series on foreclosure prevention measures being taken by the government and other banking institutions. The Federal Deposit Insurance Corp (FDIC) is responsible for insuring the majority of bank deposits made here in the U.S.  It's chairman, Shelia Bair, has proposed a plan to prevent up to 1.5 million foreclosures by sharing losses with mortgage companies that refinance certain home loans. While this sounds like the solution we have all been waiting for, the FDIC's plan is not going over very well in Washington. Treasury Secretary Henry Paulson feels that the $700 billion dollar stimulus (known as the Troubled Asset Relief Program or TARP) is not meant to be spent but rather invested and that the FDIC's plan would be considered spending. The FDIC believes that in order to stem the rise in foreclosures that incentives need to be given to mortgage servicers to provide loan modifications on a large scale. You can read the entire proposal at on the FDIC website.  

This is not the first time the FDIC has become involved in the foreclosure crisis. Back in late August of this year, Shelia Bair announced a plan to help Indymac Bank borrowers avoid foreclosure on their homes. Watch the video below to learn more:

Indymac Bank is reaching out to its borrowers who are behind in payments and offering them an opportunity to keep their homes. While there are certain conditions to be met, the fact remains that this plan is opening doors for troubled borrowers that were once locked to them.  By making loan modifications available to borrowers, Indymac has the opportunity to help their company avoid further losses on bad home loans and help families stay in their homes for the long haul. Based on the results of the Indymac Bank loan modification plan, we can determine what the outcome might be if a plan like this was implemented by the government. Maybe Mr. Paulson will change his mind then.

Related Articles:

Coconut Creek Real Estate: Foreclosure Prevention Measures - Part I

Coconut Creek Real Estate: Federal Plan To Reduce Foreclosures