Report Casts Doubt on Dem’s aid plan

For readers to my blog I would be interested in finding out what you thought of this plan. Should the government buy troubled loans? Below is the news story from Reuters.

A plan by congressional Democrats to aid underwater home owners by having the government buy troubled loans was criticized last week in a report from the nonpartisan Congressional Budget Office.

The plan, sponsored by Sen. Christopher Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.) would have the Federal Housing Administration refinance mortgages after lenders erased that part of the loan that is underwater.

“Such actions could help reduce the number of foreclosures … (but) would significantly shift the risk involved in mortgage losses from the current lenders and investors to taxpayers,” the report said.

The report also warned that the plan isn’t broad enough to restore the housing market or the sagging economy to good health.

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