Fed considers mortgage rescues

October 23, 2008 10:01AM

As the federal government juggles potential plans to use its $700 billion financial rescue fund to directly aid homeowners with mortgages in default, Federal Deposit Insurance Corp. Chairman Sheila Blair is expected to propose a $40 billion strategy to the Senate Banking Committee hearing today. Blair’s plan includes providing private lenders with an incentive to renegotiate mortgages to terms that are more favorable for borrowers, after a request for banks to do this voluntarily proved ineffective. Another idea on the table would have the federal government buying only those bad mortgages that have not been securitized, though it is unclear how many fit into this category.

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