The Federal Deposit Insurance Corporation has proposed a new plan that could help a large number of borrowers in the United States that are dealing with declining property values. The plan is specifically aimed at homeowners whose mortgage balance is currently higher than their property value, thus putting them "upside down". Under the new plan, the United States Treasury Department would issue loans to borrowers that would allow them to pay off some principal and restructure their mortgages. This could work wonders for over 1 million homeowners. Many homeowners aren't currently able to refinance their adjustable rate mortgage because they don't have the equity to do so. In the very recent past, loans have been written based on very high loan-to-value ratios. Now that underwriting guidelines have tightened and property values have declined, many borrowers are unable to qualify to refinance out of their adjustable rate and into a fixed rate mortgage. This is probably the most logical proposal that I have seen during the current mortgage crisis. I sincerely hope this proposal gets the approval of our Congress.
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