FDIC Encourages Payment Reduction Mod for Unemployed

The Federal Deposit Insurance Corp. is "encouraging" its loss-sharing partners to temporarily reduce mortgage payments for at least six months when borrowers lose their jobs. "With more Americans suffering through unemployment or cuts in the paychecks, we believe it is crucial to offer a helping hand to avoid unnecessary and costly foreclosures," FDIC chairman Sheila Bair said. FDIC provides loss-sharing protection to banks and other acquirers of failed depositories so they will acquire and manage the troubled assets. These acquirers also agree to follow a FDIC loan modification program for struggling borrowers. Now FDIC wants homeowners who lose their job to get immediate relief. "This is simply good business since foreclosure rarely benefits lenders and would cost the FDIC more money, not less," chairman Bair said.