Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., told the Senate Banking Committee that her agency and the Treasury Department are working closely to find ways to prevent avoidable foreclosures. The plan would use the Treasury Secretary’s new authority under the Emergency Economic Stabilization Act to provide guarantees to mortgage lenders. Bair worked with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke in crafting the financial rescue law.
“Now that the administration has taken strong measures to stabilize financial institutions, it is imperative that we apply the same sharp and urgent focus to help the individual homeowners whose plight is at the root cause of this crisis,” said Senate Banking Committee Chairman Christopher Dodd, D-Conn.
With a new focused eye at helping individual homeowners, Sheila Bair said, “Through this week, IndyMac Federal has mailed more than 15,000 modification proposals to borrowers and has called many thousands more in continuing efforts to help avoid unnecessary foreclosures. So far, more than 3,500 have accepted the offers and others are being “processed.” Unaffordable loans could be converted into loans that are sustainable over the long term.”
Other witnesses at Thursday’s hearing include Neel Kashkari, the Treasury’s interim assistant secretary for financial stability; Brian Montgomery, the assistant secretary for housing at the Department of Housing and Urban Development; James Lockhart, director of the Federal Housing Finance Agency; and Elizabeth Duke, a member of the Federal Reserve Board of Governors.
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