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Anti-foreclosure program is not enough

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TEXT OF INTERVIEW

Steve Chiotakis: A report out today by the Congressional Oversight Panel says the government program to help homeowners avoid foreclosures is falling short. And it’s calling on Congress to beef up rescue efforts. Marketplace’s John Dimsdale joins us live from Washington with the latest. Good morning John.

John Dimsdale: Good morning Steve.

Chiotakis: So what’s this panel saying?

Dimsdale: Well essentially they think that the mortgage foreclosure epidemic has moved beyond the subprime mortgage crisis and is growing worse because of unemployment. The panel says that that $50 billion loan-modification program, which was an effort to make terms more affordable for struggling homeowners, was never really designed to cope with a jobless rate in the 10 percent range, which means now even homeowners who took out conventional, fixed mortgages with good down payments have lost jobs and they’re facing foreclosure.

Chiotakis: What are they recommending, John?

Dimsdale: They think the government should step up efforts to get these loans modified. And that could mean throwing more money at the problem, which most panel members said would be worth the expense. But that’s not a unanimous view. The panel’s two Republican representatives voted against the report. They don’t think that the support program should be expanded because it’ll put m,ore taxpayer money at risk.

Chiotakis: All of this, John, comes in the midst of warnings that the Federal Housing Administration, the FHA, could be facing a government bailout down the road. What’s that all about?

Dimsdale: Yeah, that’s right. With the housing bust, the FHA has been insuring mortgages for low-income and first-time home buyers at an incredible rate — four times more than usual. And there’s worry that the FHA’s insurance fund is going to run out. The commissioner was before Congress yesterday saying he doesn’t see the need. But as these defaults rise, not everybody is reassured.

Chiotakis: All right, Marketplace’s John Dimsdale in Washington. John, thanks.

Dimsdale: Thanks.

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