The US Federal Deposit Insurance Corporation and the Treasury Department are set to work hand in hand on a program that could help improve the national concern on foreclosed properties. The said government agencies are reported to have been finding ways to alleviate widespread foreclosures in the country.
One of the initial plans is to utilize $50 billion of the overall budget to gather $500-$600 billion government guarantees. The government is eying to provide guarantee on mortgages that are lower than $3 million. All the funds for the overall budget will come from the bailout package that has been passed recently.
The said guarantee scheme will require bank savings or five-year period loans that offer lower interest rates. And since the government is giving out the guarantees, risks in the mortgages will no longer be the homeowner’s concern.
FDIC Chairman Sheila Bair had discussed the said program in an international deposit insurer’s conference last October 29. Bair said that FDIC and the Treasury Department had developed a federal program that could help lots of borrowers avoid foreclosures. She also said that such a framework is needed to have the chance of altering loans on a large scale basis.
Jeenifer Zuccarelli, spokeswoman of the Treasury Department, has denied reports that the program was scheduled for a release last October 30. Zuccareli said that the report was gravely inaccurate. She also said that the office is still on the process of looking at several proposals on stopping the increase of foreclosed homes.
Lobbyists for the program also said that the details of the plan could still be subjected to changes. Although the FDIC has taken the initial steps to improve the situation of possible foreclosure properties, the Treasury Department still has the upper hand. According to Federal laws, the Treasury Department has the power to administer the terms of the banking bailout. However, the said government office has yet to evaluate the program.
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