Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., is working on legislation that would create a new federal program to purchase "distressed" mortgages from lenders at a discount and provide a new 30-year fixed-rate mortgage to homeowners. Those mortgages could be insured by the Federal Housing Administration or purchased by Fannie Mae or Freddie Mac. The proposed Federal Homeownership Preservation Corp. is modeled after a Depression-era program that rescued 1 million homeowners from foreclosure. "It would allow us to deal with this foreclosure matter in a creative way -- one that has been tried before and, I think, worked well," Sen. Dodd told reporters. The chairman said he plans to hold extensive hearings soon on how to reduce foreclosures and stimulate the economy.

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