Foreclosure Suits Could Be 'Very Damaging'

A voice of educated reason has weighed in on the foreclosure mess. Sheila Bair, the chair of the Federal Deposit Insurance Corp., which insures consumer bank deposits, expressed concern during a housing finance conference in Washington, D.C., that a glut of foreclosure litigation would "ultimately be very damaging to our housing markets if it ends up unduly prolonging those foreclosures that are necessary and justified."

Bair recommended a "global solution" to the foreclosure paperwork debacle that could lower monthly payments for some troubled homeowners by as much as 25 percent through mortgage modifications. She also reported that FDIC-sponsored mortgage modifications in which the agency cut loan payments by 10 percent to 40 percent had shrunk "redefault" rates by half.

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