Mortgage Informer

Federal Deposit Insurance Corp. Chairman Sheila Bair said she’s frustrated by a lack of support from the Bush administration for her $24 billion proposal to have the U.S. guarantee troubled mortgages.

“It has been frustrating,” Bair said Tuesday at a conference in Washington. “But we continue to have discussions.”

FDIC employees briefed President-elect Barack Obama’s transition team on the plan under consideration with the Treasury Department since October, she said. Bair is encouraged that Obama is “focusing on foreclosure prevention.” Bair said she’s hopeful President George W. Bush or Obama will support the program that might prevent 1.5 million foreclosures through next year.

Bair is pressing the Treasury Department to use authority in the $700 billion financial-rescue package to implement a loan-guarantee program to spur mortgage modifications. She said the law gives the government clear authority to fund her plan. Treasury Secretary Henry Paulson disagrees, Bair said.

U.S. foreclosure filings increased 71 percent in the third quarter from a year earlier to the highest on record as home prices fell and stricter mortgage standards made it harder for borrowers to sell or refinance, according to RealtyTrac, a provider of default data.

“It would be better to do it now, but it will still be needed in the first quarter of 2009, too,” Bair said of her proposal.

Bair said she “wholeheartedly” supports Obama’s choice of Timothy Geithner, head of the Federal Reserve Bank of New York, to be his Treasury secretary.

“I really respect Tim,” Bair said. “I think it’s good to have continuity.”

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Tags: Mortgage proposal