W.Ross proposes federal loans insurance - NY Post

Oct 2 (Reuters) - A federal insurance scheme could benefit Wall Street as well as the American public, billionaire investor Wilbur Ross wrote in the New York Post on Thursday.

Ross, one of the world's best-known turnaround specialists after helping restructure more than $200 billion of defaulted companies' assets globally, proposed a detailed plan in the paper.

"To be eligible existing lenders would mark their loans, whether performing or not, to 100 percent of today's lower value of homes, with annual payments limited to 38 percent of the borrowers' independently verified incomes, a traditional ratio," Ross wrote.

Ross suggested that the government then insure an undivided 50 percent of the mortgage, all of which would come due in 10 years.

He called for the annual insurance premium to be 2.5 percent of the amount insured and added that if the borrower defaulted, the government would just make the payments when originally due.

Ross said the government would receive one third of any appreciation above the new, lower mortgage amount on the first sale of the house.

"The original lender would also receive one third of any gain, up to the amount it forgave on the original loan," Ross wrote adding that the homeowner would retain the final one-third.

Ross also suggested that in addition to annual premiums the government would get gains on houses that had appreciated, offsetting losses on those whose prices had continued to decline. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Greg Mahlich)