Jam Piper Jam
Truth Seeker
By EDMUND L. ANDREWS and VIKAS BAJAJ
WASHINGTON, Dec. 5 ? The Bush administration reached an agreement with the mortgage industry on Wednesday on a plan to freeze interest rates for up to five years for a portion of the two million homeowners who bought houses in the last few years with subprime loans.
The plan, hammered out after weeks of talks among Treasury Department officials, mortgage lenders and Wall Street firms, would allow distressed borrowers who are current on their payments to keep their low introductory rates and escape an increase of 30 percent or more in their monthly payments when the rates expire.
Democratic lawmakers and presidential contenders quickly criticized the plan as being too timid and promoted more ambitious proposals of their own.
The agreement, to be formally announced Thursday by President Bush, is expected to contain numerous limitations that would exclude many ? if not most ? subprime borrowers, according to industry executives who have seen it. It would exclude those who are delinquent on their payments ? about 22 percent of all subprime borrowers, according to First American LoanPerformance, an industry research firm.
The plan is also expected to exclude any borrower whose introductory rate expires before Jan. 1. About $57 billion in subprime loans are scheduled to be reset at higher rates in the final three months of this year, according to estimates by First American LoanPerformance.
Mortgage companies could also exclude borrowers who 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.
Read
WASHINGTON, Dec. 5 ? The Bush administration reached an agreement with the mortgage industry on Wednesday on a plan to freeze interest rates for up to five years for a portion of the two million homeowners who bought houses in the last few years with subprime loans.
The plan, hammered out after weeks of talks among Treasury Department officials, mortgage lenders and Wall Street firms, would allow distressed borrowers who are current on their payments to keep their low introductory rates and escape an increase of 30 percent or more in their monthly payments when the rates expire.
Democratic lawmakers and presidential contenders quickly criticized the plan as being too timid and promoted more ambitious proposals of their own.
The agreement, to be formally announced Thursday by President Bush, is expected to contain numerous limitations that would exclude many ? if not most ? subprime borrowers, according to industry executives who have seen it. It would exclude those who are delinquent on their payments ? about 22 percent of all subprime borrowers, according to First American LoanPerformance, an industry research firm.
The plan is also expected to exclude any borrower whose introductory rate expires before Jan. 1. About $57 billion in subprime loans are scheduled to be reset at higher rates in the final three months of this year, according to estimates by First American LoanPerformance.
Mortgage companies could also exclude borrowers who 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.
Read
