Bush Readies Mortgage Bailout

Aid plan would back new loans for homeowners in 'upside-down' mortgages
By Rob Quinn,  Newser Staff
Posted Mar 29, 2008 6:48 AM CDT
A sign is seen inside the interior of a non- occupied single family home offered in a lender foreclosure home auction in Burbank, Calif., in this Oct. 11, 2007 file photo.    (AP Photo/Damian Dovarganes, file)
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(Newser) – Homeowners facing foreclosure could soon be getting a helping hand from the Bush administration, the Washington Post reports. Details are being finalized on a plan that would see portions of loans forgiven for people who now owe the bank more money than their house is worth. The remainder would be refinanced into smaller mortgages backed by public funds.

The plan's backers say it will rescue many of the 8.8 million households now trapped in negative equity. Democrats are pushing for a wider-reaching plan. The aid proposal is likely to further vex conservatives, already irked by the Bear Stearns deal, who don't want the government messing with market forces. One Republican senator commented that he hoped the administration wasn't getting into "subsidizing stupid behavior."