Congressman Has Plan To Prevent Foreclosures

BOSTON -- Rep. Barney Frank laid out a plan Friday that would help homeowners avoid foreclosure.

NewsCenter 5's Steve Lacy Frank spoke to business executives in Boston about the numerous challenges posed buy the nation's lending crisis. Last week, the House passed a bill sponsored by Frank called "The American Housing Rescue and Foreclosure Prevention Act."

Congressman Has Plan To Prevent Foreclosures

At its core, an expansion of the federal housing administration that would allow people facing foreclosure to apply for a lower cost government-backed mortgage. The hope is that lenders might be willing to cut government-backed borrowers a deal in order to keep their homes from falling into foreclosure.

"If you are will to wipe down that loan, we will see that it gets a guarantee so that you will only be getting 80 percent of what you were supposed to get, but you will be sure to get that 80 percent," Frank said.

With a price tag of $1.7 billion, Frank said that the plan could prevent 500,000 foreclosures. Critics fear that greater government oversight could hamper lenders and borrowers in the future.

Frank said that the cost of inaction is greater.

"Foreclosures -- yes they hurt mostly the person who is foreclosed. Maybe that person was irresponsible. But a lot of totally innocent people get hurt, as well," Frank said.