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 isnâ€™t broad enough to restore the housing market or the sagging economy to good health.