Obama Pushes Modification Program

President-elect Barack Obama signaled that he wants the Treasury Department to move ahead with a loan guarantee program advocated by the FDIC that could facilitate loan modifications, but so far the Treasury and the White House are not on board. "It is absolutely critical that Treasury work closely with the FDIC, HUD and other government agencies to use the substantial authority that they already have to help families avoid foreclosure and stay in their homes," Mr. Obama said during his first press conference on Nov. 7. As part of the $700 Troubled Asset Relief Program bill, Congress provided Treasury with the option of purchasing or guaranteeing troubled mortgage loans. And section 109 of the bill allows the use of loan guarantees to facilitate loan modifications. Section 109 has "tremendous potential," a banking consultant said, but the Treasury Department hasn't "bought" into the Federal Deposit Insurance Corp.'s loan modification program. "As a result, the 109 authority, even if not deployed now, could prove formidable in the next Administration," said Karen Shaw Petrou, managing partner of Federal Financial Analytics.