FDIC Chief Sheila Bair on Her New Anti-Foreclosure Plan

I want to further Ms. Biar's idea of helping the homeowner. Don't the big-wigs in Washington understand that the entire economy's recovery rests in the hands of homeowners? Personally, I don't think anyone is thinking logically. If the people's tax money is going to bail out Wall Street, why is the idea of people's tax money going to bail out Main Street so unpopular?

Let's do Housing 101. I buy a house. I can afford my mortgage. I feel good about my future and my home. My house goes up in value. I feel richer. I can buy things. The economy depends on my consumer spending.

The Problem: My home now starts to lose value because others around me are losing their homes to foreclosure, putting downward pressure on my home value. I feel dispair and I feel poorer. I begin to cut spending. I try to refinance but I now owe more than what my home is worth today. I'm stuck. I try contacting my lender for help. "Sorry, your payments are up to date, we cannot help you until you are nearing foreclosure".

The Solution: Allow Mortgage Insurance to cover up to 125% of the value of the home in order to allow those that are currently upside-down to refinance their current mortgage(s) into a fixed 30-year 4.5%-5.5% loan. The borrower would continue to pay the mortgage insurance premium, but this scenario would allow payments to be reduced, keeping the homeowner in his/her home without fear of foreclosure.

The current modification programs really get the borrower into deeper debt, as most are turned into "interest-only" or 40-year-loans after the borrower provides documentation that he/she is on the verge of foreclosure. The arguement that borrower's must sacrifice their credit in order to get help is truly ridiculous. Let's use our heads. Asking people to become irresponsible in order to be helped is as asinine.

Let the government show the little guy that it really does care. The consumer confidence issue will NOT go away until government starts focusing on Main Street. Right now, the only help out there is for the banks and the auto industry. People, if I cannot afford my house, what difference does it make that Ford makes a hybrid! I won't be able buy it anyway, particularly since my credit will be bad.

Elizabeth Cooper-Garcia of FL 10:36AM December 11, 2008