The pushback from the Bush White House stems from a belief that people might actually opt for foreclosure believing they’ll get a better deal.
"The question is how to minimize the losses going forward. The default process of foreclosing on every defaulted loans isn’t working. It’s making the trouble worse not better. The answer is making those loans more affordable," explains Brown.
As you might remember JP Morgan Chase announced that it will make its own contribution to stemming the tide of foreclosures sweeping the country by modifying around $70 billion of its owned mortgages that are in or nearing default.
The bank's efforts will focus on restructuring loans for borrowers who are at risk of foreclosure and it has placed a 90 day moratorium on all foreclosures in order to put guidelines for its program in place. The company will hire and train an estimate 300 additional loan counselors (it currently employs about 2,500) and open two dozen new regional counseling centers.
The company has targeted 400,000 families for the rescue program. This is in addition to what it claims are 250,000 families which have already been helped in the earlier restructure of some $40 billion in loans.
We'll be watching.
To hear our entire interview with FDIC Chief Economist Richard Brown please watch the video.
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