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New Jersey Governor Joins Push for National Foreclosure Relief

""New Jersey Governor Jon S. Corzine"":http://www.state.nj.us/governor is calling for federal assistance to homeowners struggling to make their mortgage payments and facing the threat of foreclosure. Corzine said that a federal program needs to be implemented to address the housing crisis or the government risks driving the nation even deeper into recession.
Corzine urged government officials to consider an approach similar to one put forth by ""Federal Deposit Insurance Corporation"":http://www.fdic.gov (FDIC) Chairman Sheila Bair - a plan modeled after the systematic loan modification program the FDIC implemented at IndyMac after taking over the failed bank and its troubled subprime mortgage portfolio. Bair's plan would use $20 billion of the Treasury's $700 billion Troubled Asset Relief Program (TARP) to provide incentives for lenders to modify underperforming mortgages through payments for each modification made and government guarantees to cover partial losses in the event a restructured loan redefaults.
Corzine, who once led Wall Street giant Goldman Sachs, agrees that part of TARP should be used to address the nation's foreclosure problem. The first half of TARP funding has been used primarily to inject capital into banks' balance sheets, but has failed to significantly increase lending to consumers, Corzine said.
Corzine argued that a better use of taxpayer funds would be a broad, systematic plan to modify troubled home loans and said the second half of the bailout money should go to stabilizing the mortgage markets. ""The TARP plan is a piece of cloth concealing the most real and fundamental problem"" of foreclosures, Corzine said.
Congressional leaders, most vocally House Financial Services Committee Chairman ""Barney Frank (D-Massachusetts)"":http://www.house.gov/frank, have recently said that Congress will not give the Bush administration the rest of the $700 billion rescue package unless loan modifications are part of the plan.
Governor Corzine also said regulators should implement a three- to six-month nationwide moratorium, or ""time-out,"" on foreclosures, to give federal officials time to implement a national loan modification system and provide direct assistance to those homeowners already facing foreclosure. In addition, Corzine said there should be a return to pre-2005 bankruptcy rules and that bankruptcy judges should be permitted to adjust the principle on a mortgage, when necessary.
According to a %{=FONT-STYLE: italic}Reuters% report, Corzine also suggested an approach similar to the Home Owners' Loan Corporation, a New Deal agency established in 1933 that was used to refinance home loans to prevent foreclosure. It extended home loans to longer-term loans, eventually granting long-term mortgages to more than a million people facing the loss of their homes, %{=FONT-STYLE: italic}""Reuters"":http://www.reuters.com% said.
The New Jersey governor said the current housing crisis ""has shaken our country to the core as we grapple with how we allowed more than two million homeowners and their families to be evicted, literally scrambling for shelter, deprived of their fundamental right to shelter.""
Governor Corzine said the solution is going to take a large-scale response at the ground level. The mortgage relief initiatives he has suggested ""would help us to stabilize the foundations of our financial system and put our economy back on stronger ground,"" he said.
""But at the end of the day,"" Corzine noted, ""it's important to remember this isn't just about mortgage-backed securities and credit default swaps. It's about people.""

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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