Report Suggests FHA Foreclosure Rescue Fund

With the possibility of accelerating foreclosures this year and next, Congress might consider creating a rescue fund that would allow the Federal Housing Administration to purchase and cure defaulted mortgages, according to a congressional report."While this policy option would include upfront costs," lenders would likely sell those loans at a discount "given the prospect of mass delinquency and foreclosure," the Joint Economic Committee report says. The report notes that former FHA commissioner William Apgar authored the proposal to fund and revamp the FHA to oversee a rescue fund. John Robbins, chairman of the Mortgage Bankers Association, said such a proposal could have a "detrimental effect" on the FHA mortgage insurance fund. The MBA chairman also said the magnitude of the foreclosure problem is being overblown, but that industry is working on solutions to refinance delinquent borrowers. The quickest and most cost-effective way to provide help for troubled homeowners, the JEC report says, is to step up funding for community-based foreclosure prevention programs.