FDIC has plan of its own for homeowners

WASHINGTON, Nov. 14 (UPI) -- The Federal Deposit Insurance Corp. has come up with a $24.4 billion plan of its own for helping as many as 1.5 million distressed U.S. homeowners.

The plan puts the FDIC at odds with the Bush administration. Treasury Secretary Henry Paulson Jr. this week unveiled a mortgage-modification plan, which FDIC Chairman Sheila Bair said didn't go far enough.

The FDIC plan would help homeowners who are at least two payments behind on their mortgages, The Washington Post reported Friday.

The FDIC plan would be adjust monthly payments to 31 percent of a homeowner's household income with the government paying for half the lender's losses in most occasions if the plan fails, the Post said.

The FDIC estimates one-third of the adjusted mortgages would still go into default. Credit Suisse, in a recent research note, said 45 percent of modified loans have gone back into default.

U.S. Sen. Christopher J. Dodd, D-Conn., said the Treasury should act on the plan.

"It is confounding to me why the secretary of the Treasury and others refuse to understand that this is the heart of the problem," Dodd said to the Post. "Until we solve the foreclosure problem, we will not have any hope of solving the larger problem."