Battle of the loan modifiers

  • Share
  • Read Later

Sheila Bair, head of the FDIC, was on NPR this morning talking about her new plan to stem foreclosures. She wants to entice servicers to modify more mortgages by having the government shoulder up to half of the losses from any rewritten loans that go back into default. Sound good? Not to the White House or Treasury Department.

Bair, a Republican appointee and long-time booster of the idea that more radical action is needed to stabilize the housing market, is no stranger to going in a direction other than the Bush Administration might like. She was conspicuously absent from the Treasury-anointed loan modification program rolled out by Fannie Mae and Freddie Mac earlier this week. It’s symbolically appropriate one-upsmanship that she wants to give servicers $1,000 for each loan modified; Fan and Fred recently increased the amount they offer to $800.

So now we see what happens. Bair wants money from TARP to fund her plan. Hank Paulson isn’t having any of it. But, as the Washington Post pointed out, “proponents increasingly view the Bush administration as a roadblock with an expiration date.” Bair’s term extends through mid-2011.

Barbara!