Sheila Bair the FDIC Chairman has proposed a way to reduce foreclosures, and the proposal is beginning to win approval from the Obama team. Senator Dodd of Connecticut, who has made the housing crisis a priority of his has said, ” the proposal has gained traction… but it isn’t settled.”

The proposal could potentially prevent 1.5 million foreclosures by rewarding participating lenders by sharing the cost of defaults and modified loans.

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