WASHINGTON (AP) -- Sen. Charles Schumer urged federal regulators Wednesday to do more to help certain homeowners struggling to make mortgage payments.
The Democratic senator from New York made his plea in a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, two men at the forefront of efforts to make sure the credit crunch that has rocked Wall Street doesn't undermine the economy.
Schumer asked Paulson and Bernanke to support a plan in Congress to provide $100 million to nonprofit housing groups to help troubled subprime borrowers, those with blemished credit histories, to refinance their homes.
Those borrowers have been hardest hit [LA Times] as interest rates have risen and home values have weakened. As a result, foreclosures and late payments have soared. The credit crunch, which started with these homeowners, has spread to other borrowers.
Schumer said the $100 million, which would be contained in a Senate appropriations package, may not be sufficient. He called on the Bush administration to ``come up quick additional financing.''
Schumer, a member of the Senate Banking Committee, also called upon policymakers to use their powers of persuasion to get financial institutions to pony up money.
``I urge you to use your leverage over financial institutions, whether banks, lenders, servicers or brokerages, to encourage them to match the federal government's efforts to provide funding to nonprofit group working to prevent foreclosures, and to work with the nonprofits to help borrowers who need ... loan modifications,'' Schumer wrote.
He said he intends to offer legislation when Congress returns next month to boost investment caps on Fannie Mae and Freddie Mac ``to increase their flexibility to participate in loan modifications with borrowers and lending institutions.'' The administration has so far been opposed to raising the caps. The two mortgage giants a few years ago suffered multibillion-dollar accounting scandals.
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