Federal Deposit Insurance Corp. (FDIC) chairman Sheila Bair is calling on Treasury officials to streamline the loan modification process and require writedowns of second mortgages.

Junior liens have been a major obstacle to effective loan modifications, the FDIC chairman told the Senate Banking Committee Wednesday. "We must finally tackle second liens head on, by requiring servicers to impose meaningful writedowns on second lien holders when a first mortgage is modified or approved for a short sale," Bair testified.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.