Feds Considering Program To Stem Foreclosures

Washington, DC, Oct. 30, 2008--The treasury is considering a plan that would help around 3 million homeowners avoid foreclosure.

Government agencies were reportedly contemplating using around $50 billion from the recently passed bailout of the financial industry to guarantee about $500 billion in mortgages.

The plan could include loan modifications that would lower interest rates for a five-year period.

More than 4 million American homeowners with a mortgage were at least one payment behind on their loans at the end of June, and 500,000 had started the foreclosure process, according to the most recent data from the Mortgage Bankers Association.

The government's program would be run by the Federal Deposit Insurance Corp. The agency's chairman, Sheila Bair, said last week she was working "closely and creatively" with the Treasury Department on such a plan, but revealed few details.