01-25-08

It was suggested by the Senate Banking Committee Chairman Christopher Dodd that the government should buy these bad loans and put them into FHA programs or have them secured by Fannie Mae or Freddie Mac, possibilities of creating a new government agency also where mentioned. Similar ideas where posted last year however there is still resistance as to whether or not the government should interfere to this extent.

House Rep. Mark Kirk introduced the idea that an agency that was disbanded in the 50s be brought back to life. The Home Owners' Loan Corp existed in the 30s to buy bad mortgages. They also admitted that it may not be easy to identify the definition of a distressed mortgage or who would qualify. This is not a consumer agency but rather a place where big banks can dump off bad loans with little repercussions. But it is unclear as to whether this will happen and if the banks would be interested.