Democrat Floats Plan to Refinance Home Loans With U.S. Help

Wall Street Journal (02/27/08) P. A14; Paletta, Damian
House Financial Services Committee Chairman Barney Frank, D-Mass., in advocating increased government involvement to ease the mortgage crisis, wants to reserve approximately $15 billion over five years for the government to buy distressed loans and refinance them into FHA-backed mortgages. Observers expect some resistance from the Bush administration, but Frank insists, "It was the lack of government intervention that got us here." For the plan to be successful, loans would have to be discounted by lenders to more manageable amounts. Additionally, Frank has proposed helping state and local governments purchase foreclosed or vacant properties at discount prices using $20 billion in federal grants and loans. Meanwhile, Senate Banking Committee Chairman Christopher Dodd, D-Conn., also plans to introduce a measure to help struggling borrowers refinance.