Another Loan Modification Plan on the Way that will benefit Arizonan’s

The Bush Administration announced a plan Tuesday that would use part of the government’s $700 billion in bailout money to encourage loan modifications so that borrowers would receive more affordable loans that requires less than 38 percent of their income to pay.

To qualify, borrowers must live in their homes, not be in bankruptcy proceedings, and owe at least 90 percent of the value of their home.

Fannie Mae and Freddie Mac would administer the program.

Critics say that the plan won’t work. FDIC Chairman Sheila Bair said it “falls short of what is needed to achieve wide scale modifications of distressed mortgages.”

Source: The Wall Street Journal, Damian Paletta, Jessica Holzer and Ruth Simon (11/12/08)