Taking steps to save homes

November 12, 2008 7:54 AM

WASHINGTON D.C. (NEWSCHANNEL 3) - The U.S. government is taking steps to help people keep their homes.

But it's not good enough for one Washington financial leader.

The Federal Housing Finance Agency announced a new plan to lower the interest rates on existing mortgages. The plan keeps homeowners from spending more than 38 percent of their income on their home.

The chairman of the FDIC says while this is a step in the right direction, it falls short.

She says the government needs to do more to help tens of thousands of people avoid foreclosure.

Citigroup is stopping most of its foreclosures to help homeowners. The company is focusing on the hardest hit areas with high unemployment and foreclosure rates like Michigan.

The plan applies to a borrower's primary residence. To participate homeowners have to have a job and must agree to work with the bank to pay back the loan.

The program is expected to affect about $20 billion in mortgages.