Didn't see this anywhere, but if it is please lock...Does anyone else have a problem with this? I mean, this is borderline communism and this is only delaying the inevitable... People with questionable credit never should have been able to get into these loans in the first place and now you "freeze" rates so they won't lose their homes? Rate Freeze... Bush to Unveil Aid to Homeowners 'Starter' Mortgage Rates Could Be Frozen for 5 Years; Political Stakes Are High By DAMIAN PALETTA, AMY CHOZICK and JOHN D. MCKINNON December 6, 2007; Page A3 WASHINGTON -- President Bush is set to announce a plan to help struggling homeowners avoid losing their properties, including a temporary freeze on low, introductory mortgage-interest rates that would otherwise jump higher in the next few years. The plan, expected to be announced today, seeks to combat a rising tide of foreclosures by making it easier for lenders to freeze the "starter" interest rate for certain borrowers for five years, according to a document being circulated by the Treasury Department. At Nasdaq in New York, Sen. Hillary Clinton asked mortgage-backed securities leaders to freeze interest rates and put a moratorium on foreclosures to spare homeowners. It includes an agreement, brokered by Bush administration officials, between the loan servicers who would administer a rate freeze and the investors to whom the mortgage debt has been sold. The agreement sets conditions under which rates on certain loans could be temporarily frozen. It isn't binding, but because it has the support of major investors, it is expected to give loan servicers much more flexibility to quickly rework some loans and direct other borrowers toward refinancings. The plan comes as anxiety grows about the economy generally and the troubled housing sector in particular, and becomes an issue in the 2008 presidential race. The stakes are particularly high for the White House, which could shoulder the blame if the mortgage turmoil is seen as tipping the economy into recession. Interest rates on 1.5 million mortgages are expected to reset higher next year, creating a drag on the economy. Already, foreclosure problems are contributing to waning consumer confidence and worries about falling real-estate values. Yet announcing the plan isn't without political risks for the president, either. Even before details of the plan were final, it has stirred vocal criticism from some quarters, including homeowners who are paying their mortgages and won't get assistance. Mr. Bush is focused primarily on helping homeowners, not lenders or speculators. The plan would stave off foreclosures for people who are making mortgage payments on time, but who will be overwhelmed when the low, introductory interest rates on their mortgages go up, and who don't have the cash or home equity needed to refinance. To screen out speculators, owners would have to live in their homes. The plan applies to loans originated between Jan. 1, 2005, and July 31, 2007, that reset between Jan. 1, 2008, and July 31, 2010. Office of Thrift Supervision Director John Reich said this week that the plan could help "tens of thousands" of homeowners. For other borrowers who are in somewhat better shape, the White House also wants to speed up refinancings, through the Federal Housing Administration and other sources. For example, the administration wants to allow state and local governments to use more tax-exempt-bond programs to fund refinancings, a move that Congress would have to approve through a change in tax law. One of the biggest points of debate has been how long to freeze rates. Investors favored a shorter time frame, perhaps two or three years, while Federal Deposit Insurance Corp. Chairman Sheila Bair favored a much longer period. Investor groups have faced growing pressure to be flexible, however, from both the administration and Congress. As the White House was preparing its announcement, Democratic presidential front-runner Hillary Clinton said Wall Street must acknowledge its significant role in the current mortgage crisis and do its part to help solve it. Speaking in New York to finance-industry executives, Mrs. Clinton said Wall Street enabled and often encouraged risky loans that devastated middle-class families and threaten the overall economy. Write to Damian Paletta at damian.paletta@dowjones.com, Amy Chozick at amy.chozick@wsj.com and John D. McKinnon at john.mckinnon@wsj.com
I don't have a problem with it because very few people will qualify. its actually unfair to people who have already been foreclosed on because they couldn't handle their rate hike. another thing, the first guy who comes in with the personal responsibility card, realize that this helps out the banks as much as the consumers. some you personal responsibility guys feel businesses can make no mistakes
I do agree that it sux for those that have been recently foreclosed on, but it doesn't change the fact that those that couldn't afford the homes to begin with shouldn't have be able to purchase the home... This also bailouts the lenders, who shouldn't have made the original loan, but those lenders typically sell the notes at a discount and those that purchase them are stuck with these risk adjusted notes that are doomed from the beginning... So its not all about the consumer...Maybe I'm old school, but why the social welfare on this...
It makes sense for people who can truly afford their homes, but not for people who bought way too much house for the money. For example, if someone is making $50k and bought a 500,000 home, they should not be bailed out because a rate freeze will only help temporarily. If they freeze rates for those kinds of people, it will just extend the pain of the housing correction. Hopefully they can accurately make the distinctions.
let me clarify my original post, I would have a problem with it if it was a massive bailout, this will hardly affect anyone. Read the qualifications. this is just window dressing by the gov't to say they did something.
It also sucks for people like me, who didnt buy a house, but now have to help bail out people who were stupid with their money. Can I buy a house now and have my rate frozen below market? No.
if you bought a house when they did and froze your rate you would have a house below current market rate.
Yeah I know. I support the plan as it is described in the article. I'm just hoping the government implements it correctly. Edit: Hillary's plan sounds terrible. It would bail out all the speculators and people who cant afford their homes anyways (making their foreclosures inevitable at a later date, extended the housing recession).
What do you mean? How would I freeze my rate? I could have gotten a fixed rate mortgage, but that would have been higher than the introductory rates these people have.
You should be able to get a good rate now, and considering FED will cut rates again, you likely will get a even better rate in a couple of month. So don't sweat it.
Unless I'm reading it wrong, Hillary wants a rate freeze for everyone. Bush's plan makes a distinction between people who are solvent (can truly afford their homes) and those who cannot. Also, Hillary's plan would also cover speculators.
I never like it when the government attempts to interfere in the operations of a free market, especially when it involves things like locking interest rates which is tantamount to setting hard price ceilings. I sure hope Bush's economic advisers did their homework on this one, because my portfolio has already suffered enough as it is and I'm tired of seeing red every freaking day.
From what I have seen, I'm not surprised Democrats are calling this plan from the Administration inadequate. If there is going to be government intervention in the sub-prime mortgage crisis, helping more than 12% doesn't seem unreasonable. I can understand as well those who say government should do nothing and let it play out, but the US government has a history of stepping in during a crisis (Chrysler, anyone? for starters). If it is going to step in, why help only 12%? From today's Austin American-Satesman: The plan is also expected to exclude any borrower whose introductory rate expires before Jan. 1. About $57 billion in subprime loans were scheduled to be reset at higher rates in the final three months of this year, according to estimates by First American Loan Performance. Mortgage companies could also exclude borrowers whom they conclude are making enough money to afford higher monthly payments. Barclays Capital, extrapolating from a similar program recently unveiled in California, estimates that only about 12 percent of all subprime borrowers, or 240,000 homeowners, would get relief. "From what I've heard, I don't see anything that leads me to believe we will see an increase in loan modifications," said Eric Halperin, Washington director of the Center for Responsible Lending, a nonprofit group that has studied the subprime problem. The plan is being announced as fallout from the mortgage crisis seeps into the political arena. Democratic presidential candidates said the White House plan was overly narrow. "It seems that President Bush is going to give struggling homeowners far less than they need," Sen. Hillary Clinton of New York said in a statement Monday. "With news accounts using terms like 'whittled down' and 'limited' to describe the scope of the Bush plan, it appears that the president is pushing a freeze for a very narrow group of borrowers." Clinton visited the Nasdaq stock market in New York on Wednesday and assailed Wall Street firms for the mortgage mess. She called for a 90-day moratorium on subprime foreclosures and a rate freeze that would apply to all borrowers current on payments and some who have fallen behind. http://www.statesman.com/news/content/news/stories/nation/12/06/1206mortgage.html Trim Bush!
It includes an agreement, brokered by Bush administration officials, between the loan servicers who would administer a rate freeze and the investors to whom the mortgage debt has been sold. The agreement sets conditions under which rates on certain loans could be temporarily frozen. It isn't binding, but because it has the support of major investors, it is expected to give loan servicers much more flexibility to quickly rework some loans and direct other borrowers toward refinancings. Gives the loan servicers and the mortgage debt investors cover to do the right thing becasue "the President made us do it".
