Federal Deposit Insurance Corp Chairman Sheila Bair is finalizing a legislative proposal that will let the Treasury Department issue direct loans for nearly 1 million homeowners, in a move to prop up the housing market, the Wall Street Journal said on Wednesday.
The plan, which needs Congress approval, would permit new government loans so borrowers can repay up to 20 percent of the principal they owe on their mortgage, the report said, citing
confidential draft of the proposal.
Though borrowers would not have to make any payments on the Treasury loan for the first five years, they would still be required to pay off the mortgage and loan, the report said.
The FDIC has calculated that it would require a $50 billion public debt offering to modify 1 million loans, the Journal reported.
An FDIC official was not immediately available for comment.