"Do you have an opinion about the FDIC plan to jumpstart loan modifications as a way to reduce foreclosures?" Yes, I admire FDIC, under the leadership of Sheila Bair, for taking the lead in attacking the root source of the financial crisis: the vicious cycle of declining home prices and foreclosures. I share FDIC's view that the way to break that cycle is to modify mortgage contracts in ways that enable borrowers in distress to return to good standing and stay there -- AND to do enough of them to make a difference. The FDIC plan has two major provisions: (1) a risk-sharing arrangement where the government would absorb up to 50 percent of the losses in the event of a re-default; and 2) a modification that would reduce the borrower's monthly payment to 31 percent of inco...
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