Geithner to work with Sen. Merkley on latest mortgage refi plan
Treasury Secretary Timothy Geithner said he would look into launching pilot programs for a new idea to help more than 8 million underwater borrowers refinance.
Sen. Jeff Merkley, D-Ore., introduced a plan this week for the government to buy underwater mortgages from banks, reduce the principal for eligible borrowers and refinance the loan into a new Federal Housing Administration-backed mortgage.
The FHA, the Federal Home Loan Banks system or the Federal Reserve would set up a trust and buy the home loans with revenue from government bonds. Merkley said the Rebuilding American Homeownership Trust would profit on the difference between the interest rate of the new loan and the borrowing costs on the bonds.
"We like the way you designed it," Geithner told Merkley at a Senate Banking Committee hearing Thursday. "It would help reduce the remaining pressures that housing has on the economy. It doesn't leave the taxpayer to pay for it."
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July 31, 2012
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