Buybacks to regulate mortgages
Congress is considering a proposal to re-instate a homeowners' loan institution that hasn't existed since the 1930's. Lawmakers want it to profit by buying back troubled mortgages. John Dimsdale reports.
Acquiring a mortgage loan (iStockPhoto.com)
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Scott Jagow: Congress has been on spring break, but gets back to work today. Regulating the mortgage industry is another top priority. John Dimsdale has more on that.
John Dimsdale: One congressional proposal would re-create the government-run Homeowners Loan Corporation from the 1930's. The idea is to have a government agency buy and service troubled mortgages temporarily.
One co-sponsor, Illinois Republican Mark Kirk, says there's an initial cost. But in the 1930's, the corporation ultimately made money.
Mark Kirk: It earned a profit by providing a steady source of finance. And then when the economy improved, it sold house and mortgages in a rising market, recouping its losses without seeing 1.8 million Americans thrown out of their homes.
Other lawmakers propose forcing mortgage lenders to refinance bad loans with more affordable interest rates, backed by federal insurance to guarantee the new loans.
There will be several hearings to consider housing remedies later this week, with Fed Chairman Ben Bernanke offering his input before the Joint Economic Committee on Wednesday.
In Washington, I'm John Dimsdale for Marketplace.
