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Writedowns Prescribed in Foreclosure Bill May Be Lesser of Evils for Mortgage Lenders
By Matt Squire
printA federal bill being pushed by U.S. Representative Barney Frank that is designed to stem the tide of home foreclosures in the subprime mortgage market could carry a heavy price in the form of writedowns for mortgage lenders. The proposal would empower the Federal Housing Administration to make new guarantees on up to $300 billion of outstanding subprime mortgage loans. Lenders would be required to waive penalties and fees and record a "substantial" writedown, "accepting as payment in full no more than 85 percent of the property's current appraised value." The bill's program would not be compulsory; mortgage holders would...
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