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US compensator reveals aggressive mortgage modification plans

The US financial compensator, the Federal Deposit Insurance Compensator, has revealed aggressive new plans to help indebted homeowners.

The US banks have begun sweeping new plans to remodify millions of homeowners’ mortgages in an attempt to draw them away from arrears and repossession.

In the new proposed details, the FDIC says it will cover 50 per cent of losses incurred if that modified mortgage should subsequently re-default.

The FDIC will also pay providers and servicers $1,000 to help get mortgages down to as little as one third of the borrower’s income.

This plan is set to cost the US Government $24.4bn, which it will find from the $700bn bailout package. It says the plan can be applied to the estimated 1.4 million mortgage loans that were 60 days or more past due as of June 2008, plus an additional three million loans that are projected to become delinquent by year-end 2009.

The plans have yet to be accepted by either Treasury secretary Hank Paulson or President Bush.

The FDIC says: “Although foreclosures are costly to lenders, borrowers and communities, the pace of loan modifications continues to be extremely slow – around 4 per cent of seriously delinquent loans each month.

“It is imperative to provide incentives to achieve a sufficient scale in loan modifications to stem the reductions in housing prices and rising foreclosures.”


CC to ban point of sale PPI

The Competition Commission has proposed a ban on point of sale payment protection insurance as part of its attempt to increase competition in the PPI market.

Fair grounds

Satisfying the FSA over its TCF requirements begins with training staff and then ensuring the principles filter down into everyday business, say Morse management consultants Mark Lester and Karen Bond.


Out from the long grass? An IT and NI merger

Those with a long memory will recall that at the start of the last parliamentary term George Osborne announced his intention to merge income tax (IT) and national insurance (NI).  Headline grabbing as the initiative was, the reality of the complexities, challenges and costs of such a move resulted in this idea being kicked into the political long grass.


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