Fed to modify troubled mortgages
1/27/2009
As required by the federal bailout law, the Federal Reserve will look to prevent foreclosures by modifying the terms on certain delinquent loans, lawmakers said Tuesday.
The Fed will seek to adjust delinquent residential mortgages securities it holds, owns or controls, including the assets it took over as part of its rescue of Bear Stearns and American International Group (AIG, Fortune 500). The move doesn’t apply to mortgages given as collateral by banks borrowing from the Fed unless the bank defaults on the loans.
“The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank,” Fed Chairman Ben Bernanke wrote Tuesday in a letter to Rep. Barney Frank, D-Mass., head of the Committee on Financial Services.
Harold
