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More Good News? Fed Attempts to Curtail Foreclosures

  • January 28th 2009

by Mark Wellborn

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The Federal Reserve told congressional leaders yesterday that it will seek to renegotiate mortgages it owns that might otherwise enter foreclosure, The Washington Post reports.

Many details of the plan are unclear, particularly how many property owners can take advantage of the plan. But the idea is that the Federal Reserve can change the terms of what a homeowner owes on a mortgage by lowering the interest rate or lengthening the term of a loan, steps that private lenders are unwilling to take because they would lose money.

That said, the most important effect of this program could be the influence it has on the owners of mortgage loans.

From The Post:

“If the Fed strategy works and reduces the number of foreclosures while helping the owner of the loans — the central bank in this case — it could serve as a model for other owners of mortgage loans. For example, the Federal Deposit Insurance Corp. has tried to use its control of California bank IndyMac, which it seized last summer, to do loan modifications, but has been frustrated by investors in those loans being unwilling to reduce the amount of principal owed.”

See other articles related to: federal reserve

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/more_good_news_fed_attempts_to_curtail_foreclosures/489.

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