Mortgage rates inched lower Wednesday as stocks fell sharply. Yesterday the Treasury and Federal Housing Finance Agency (FHFA) announced a plan to modify mortgage loans held by Fannie Mae and Freddie Mac in an effort to reduce foreclosures. Certain loans in excess of 90 days past due would qualify for lower interest rates and extended terms to trim payments to 38% of borrowers’ gross monthly income. Sheila Bair, Chairman of the FDIC, objected on the basis the plan doesn’t go far enough to stem the tide of foreclosures. She has called for a full government takeover of Fannie Mae and Freddie Mac and a reduction of the principal balance on many troubled mortgages. Other analysts fear the plan may encourage struggling homeowners to allow their payments to become 90 days delinquent in order to qualify for assistance. We agree on both counts, and consider the plan to be ill-conceived. In other economic news, oil prices slid below $58 pb and the Bank of England appeared poised for another rate cut. Retail Sales data for October will be released Friday.