The U.S. Treasury Department and Federal Deposit Insurance Corp. are nearing an agreement on a plan that may guarantee as many as three million distressed mortgages, according to a report Thursday by the Washington Post. The plan, which would cost from $40 billion to $50 billion and use funds from the Treasury’s TARP program, would result in a “significant departure for the federal rescue program,” according to the WaPo. (Not that TARP hasn’t already departed from its original plan, or anything). Mounting economic anxiety and political pressure may push the plan into covering as much as $600 billion in mortgage loans, unnamed federal officials told the newspaper. The plan would likely be modeled after mortgage modification programs being implemented by Bank of America Corp.’s (BAC) Countrywide unit and by the FDIC for mortgages serviced by IndyMac Federal Bank, according to a report in the Los Angeles Times. HW covered the FDIC announcement last week that 3,500 mortgages were being modified under the current IndyMac/FDIC program; Bair had said another 40,000 mortgages 60 days or more in arrears also qualified for a potential modification. The new national version of the modification program should reach many more struggling homeowners. Confirmations have come in from various officials close to the plan during the last several days. The modification program “is currently in a White House policy process,” Corinne Hirsch, a spokeswoman with the White House’s Office of Management and Budget, told The Wall Street Journal. The Treasury “is looking at ways to reduce foreclosures,” spokeswoman Jennifer Zuccarelli told the Journal. But these whispers have said little regarding the scale or implementation of such a plan. “While we have had productive conversations with Treasury and the administration about options for the use of credit enhancements and loan guarantees, it would be premature to speculate about any final framework or parameters of a potential program,” FDIC spokesman Andrew Gray told the Journal. Stories about the plan have circulated since FDIC chairwoman Sheila Bair first suggested it may be in the works this past Wednesday in a Congressional hearing, urging policy makers to take steps to help struggling borrowers stay in their homes and “prevent the continued downward spiral of the housing market.” “Everyone in Washington now agrees that more needs to be done to help homeowners,” and the FDIC is working to implement a framework for systematically modifying loans, Bair said, according to the Journal. And although everyone might agree something has to be done, it seems not everyone in Washington agrees on how it should be done. The Office of Management and Budget has objected on the grounds of ideological and cost concerns, but is reviewing the plan and should reach a resolution quickly, sources told Investment Dealers’ Digest on Thursday. Write to Diana Golobay at [email protected].