Will The FDIC Chief's Anti-Foreclosure Plan Work? The head of the FDIC has detailed a plan to provide relief to struggling homeowners. Does the proposal have what it takes to rescue thousands of families from defaulting on their home loans?

Will The FDIC Chief's Anti-Foreclosure Plan Work?

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Joining us now is the Vikas Bajaj. He covers housing and finance for the New York Times. So, Vikas, a five-percent rise in existing home sales, what's behind this increase?

Mr. VIKAS BAJAJ (Finance Journalist, New York Times): A lot of it appears to be sales of foreclosed homes.

BRAND: And do we know who's buying these homes? Is it people who are actually living in them or speculators?

Mr. BAJAJ: It's probably a combination of both. The sense that people have out there is that there is certainly a level of speculator buying by local investors, by local real-estate investors. But you know, there's quite a number of loans also being made to first-time buyers and others who are looking to move and so forth.

BRAND: And meanwhile, there are various plans to try to get homeowners to hang on to their homes, to stay in their homes and avoid foreclosures, one coming out from the FDIC's Sheila Bair. Tell us about that.

Mr. BAJAJ: Yeah. So, the plan that Ms. Bair talked about yesterday at a hearing in Washington was that if servicers - these are mortgages companies that basically handle collections and billing on behalf of investors and banks - if they agree to modify some of these troubled loans in a way that the government says you should do, then the government would agree to shoulder any or shoulder a part of the future loss under this loan.

BRAND: So, who would that help, the homeowners or the banks?

Mr. BAJAJ: It will help essentially both. I mean, the government's benefit here is to keep more people in their homes, reduce the pain in the housing market. The benefit for mortgage companies would be that, you know, their future loses would be reduced and that should help ameliorate any concerns and investors have that - you know, they're going to take a big loss in these loans. And for homeowners, they - you know, the homeowners, they get this relief. They're given their second shot and hopefully a more sustainable loan that they can stay in.

BRAND: What about the government ordering banks to rewrite some of these loans, or mandating them, I should say, or even buying back these loans?

Mr. BAJAJ: Well, mandating is tough. I mean, we do live in a country where contracts are held firm and the government can't essentially say, we want you to void these contracts. I mean, the government could give some relief from a legal perspective that would allow people to modify more easily. Some people have argued what you say, that, you know, the best way to do this is to have the government acquire these loans and then it could do - it can make any changes it wants with a much freer hand than sort of doing this from a bully pulpit or from a sort of a threatening posture.

BRAND: And Vikas, what about all the people who have already lost their homes and have nothing. Is there anything for them? Can they get any money back?

Mr. BAJAJ: Yeah, certainly that's painful. I'm not sure that anybody is really talking about that right now. I mean, in the settlement at the states, there were countrywide - there were some - and there was a provision that countrywide would help these people find, at least in that case, rental housing. It's unclear whether they will be more - sort of done broadly for those people. I think the best thing that could be done is to alleviate the economic problems in the country so that the people will be able to, you know, not to lose their jobs or find new jobs, if they have already lost their job.

BRAND: Vikas Bajaj, he covers housing and finance for the New York Times. Thank you.

Mr. BAJAJ: Thank you.

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