A Bush administration plan to aid borrowers whose mortgages are greater than the value of their homes may call on lenders to forgive part of the loans, the Washington Post said, citing unidentified government officials.Under the proposal, the Federal Housing Administration would encourage lenders to forgive parts of loans and reissue smaller mortgages in exchange for financial backing from the federal government, the newspaper reported today. Borrowers would have to agree to stay in their homes, be able to afford the new payments and have lenders who sign off on the changes.
Administration officials are still ironing out details, such as how big a mortgage would have to be compared with the home’s value, the newspaper said. One unidentified official said the plan likely won’t be announced before President George W. Bush returns from next week’s European trip, the Post said.
The concept is similar to elements in legislation proposed earlier this month by U.S. Representative Barney Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee, the newspaper said. – bloomberg
Well, that would be great. It would be great if lenders were forced by law to take partial payments so your credit would only be damaged in the amount that you couldn’t afford to pay.