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WASHINGTON (Feb. 11) - A federal regulator on Wednesday urged more than 800 thrift institutions to suspend all foreclosures, while President Barack Obama's top economic officials develop plans to keep borrowers in their homes.

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The Obama administration plans to spend $50 billion to combat foreclosures of owner-occupied, middle-class homes, but is divulging few details. An announcement of the administration's housing plans is expected in the coming weeks.

Testifying before House lawmakers on Wednesday, Treasury Secretary Timothy Geithner said the government would provide incentives to "try to induce economically sensible restructuring of mortgages," but offered no specifics.

Geithner and Shaun Donovan, the new secretary of the Department of Housing and Urban Development, met with officials from housing groups and top bank executives on Wednesday to discuss how the new programs to fight foreclosures should be structured.

John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer group in Washington, said he was encouraged by the proposals being considered, though the details remain vague.

Taylor said he believed the new administration would agree to using government dollars to buy up mortgages, removing them from complex mortgage-linked securities and restructuring them at more affordable levels. He said the broad-based support from government and industry officials was a "giant step forward" compared with opposition to such an approach by the Bush administration.

Meanwhile, John Reich, director of the Office of Thrift Supervision, urged thrifts to suspend foreclosures. By doing so, thrifts "would be supporting the national imperative to combat the economic crisis," he said.

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But cooperation with the request is voluntary. "We're urging them to do it, but we're not going to try to force anyone to comply," said agency spokesman William Ruberry. "We thought it was reasonable — because the details (of the government's plans) are expected to be imminent."

Government-controlled mortgage finance companies Fannie Mae and Freddie Mac suspended foreclosure sales during the winter holidays and have halted evictions from foreclosed properties until next month.

Thrifts differ from banks in that, by law, they must have at least 65 percent of their lending in mortgages and other consumer loans — making them particularly vulnerable to the housing downturn.

Some of the largest thrifts have collapsed over the past year. The failure of Seattle-based Washington Mutual Inc. in September was the largest bank collapse in U.S. history. IndyMac Bank, a Pasadena, Calif.-based thrift, failed last July in a prelude to the broader financial crisis that erupted in September.

The institutions regulated by the Office of Thrift Supervision range in size from small community banks to big institutions like ING Bank, part of Dutch financial giant ING Groep NV.

Thrifts are being closely examined by federal inspectors for signs of heavy exposure to declining markets, or troubled areas such as construction and real estate loans.

Twenty-five U.S. banks failed last year, far more than the previous five years combined, and nine banks have failed so far this year. It's expected that many more banks won't survive this year amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit. Some may have to merge with other institutions.

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Copyright 2009 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2009-02-11 15:15:38

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19 comments

Billyboy817 07:48:54 PM Feb 12 2009

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The only fair way to correct this problem is rate reductions. The government should monitor this. We have all seen what CEO's are doing......... Rate reductins should be based upon household income and should only apply to primary homes not vacation, and second homes. Government should not payn the bill for this Banks make enough money off interest they shouild absorb.

Rjmmillis 07:33:22 AM Feb 12 2009

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Carllovelace: The U.S goverment does not have any money or does it make any money it belongs to the tax payers.And they have to take befor they can give . It would be at the expense of the tax payers

Hhppkk 07:32:51 AM Feb 12 2009

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hand every body a broom and shovel that gets bailed out to clean the sidewalks,streets,pull weeds along the roads ETC. .........for 48 hours a week if they have no job........week ends for people that have full time jobs........no frrebees for anybody

Carllovelace 06:40:21 AM Feb 12 2009

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What kills me about this whole process is the idea of who decides who has to pay and who does not? Who gets to stay in their home and not make a payment and who has to get out? Then, why doesnt every mortgage holder in America get a re-adjustment of their mortgage? Like my brother-in-law asks waitresses, do you care who pays? They say no. Then he hands them back their ticket and say's "Thank you"

Carllovelace 06:31:01 AM Feb 12 2009

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I am not a big fan of banks right now either, but we cannot expect them to buy homes and give them to people at the expense of the U.S. Government. Because, my children are the ones who will have to pay for these homes in the future. I absolutely do not support any kind of Federal Relief program.. I do however endorse a modification of the mortgage agreement between the borrower and the lender. But this must be based on a "business decision" at the lender level because it is "good business" but not mandated at the expense of the government.

Carllovelace 06:23:24 AM Feb 12 2009

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I am truly sorry for people losing their homes, but, I read this article and I want to puke. Somebody has to pay for the home. Land and building materials cost money. The banks have already actually bought the home for these people and have "leased" it back to them for a monthly payment until they pay their final payment. That was the agreement "they signed" when they purchased the home. Now, "focus-groups" want to reverse the agreement, that has been in place for decades. Where does the madness end? Next, all mortgage holders will want a reduction. Who has to pay, and who does not?

IBO314 12:10:04 AM Feb 12 2009

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Lets get stimulus, lets get in the ban wagon everyone. Come on, just close your eyes and let the goverment spend us on down the road as fast as possible. This is just prepping us up for the Amero! Goodluck, and Goodnight

IBO314 12:09:44 AM Feb 12 2009

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