WASHINGTON(MarketWatch) -- Federal Deposit Insurance Corp. chairwoman Sheila Bair said Thursday that a proposal the Treasury Department is reportedly contemplating that would cut mortgage rates for new loans for homes, is constructive but it wouldn't help homeowners in need. "Getting mortgage rates down definitely is positive but it doesn't help people that currently have unaffordable mortgages because it doesn't help them refinance," Bair told reporters after speaking at a Consumer Federation of America conference in Washington. "Low interest rates help some consumers but the ones that really need help and can't refinance are not helped." Under the proposed measure, Treasury would offer to buy securities that finance newly issued loans for home purchases. To participate, mortgage lenders would need to set mortgage rates as low as 4.5% points for 30-year-fixed-rate loans, roughly 1% point lower than current rates. As part of the proposal under consideration, Treasury would buy mortgage securities backed by Fannie Mae and Freddie Mac, in addition to those guaranteed by the Federal Housing Administration.
