Treasury plans partial mortgage guarantees

WASHINGTON, Oct. 29 (UPI) -- U.S. Treasury and Federal Deposit Insurance Corp. officials are working on a plan to help struggling homeowners avoid foreclosure proceedings, sources said.

The plan involves lowering either principal or interest rates for homeowners and offering partial payments to the lender to offset losses incurred if the homeowner fails to keep up with the new terms, The Washington Post reported Wednesday.

Sources, who did not want to be identified while negotiations continue, said the White House has not endorsed the deal, although Treasury and FDIC officials have agreed on the basic structure of the plan.

Members of Congress have complained that the $700 billion bailout package is focused on helping bankers, rather than homeowners struggling with monthly payments.

The sources said the program was estimated to cost $40 billion to $50 billion, the Post reported.