Bush Works Out Deal To Help 1,000,000+ Homeowners
Bush Administration Works Out Deal That May Help More Than One Million US Homeowners
President Bush has outlined a deal to help as many as 1.2 million American homeowners who may be unable to pay their home loans next year.
He announced a deal between banking regulators and lenders Thursday that would freeze interest rates on certain "subprime" mortgages for five years.
Subprime loans go to borrowers with poor credit, and usually have low "introductory" interest rates. Lenders can raise those interest rates after a set period, boosting the monthly payment - and the odds the borrower will default.
The plan would also help some troubled homeowners change to different kinds of mortgages that are easier to pay off.
The relief plan comes on the same day the Mortgage Bankers Association reported that the number of foreclosures has hit an all-time.
The bankers report is based on a survey of 45 million home loans and says foreclosures are underway for about seven-tenths of one percent of these loans between July and September. The same report says the number of Americans who fell behind on their loan payments hit a 20-year high of nearly 6.6 percent.
A top official of the U.S. central bank, Randall Kroszner, told a Congressional committee Thursday that many of the subprime problems grow out of lax lending standards. Kroszner, who is one of the governors of the Federal Reserve, also praised efforts to work out new agreements between lenders and borrowers because foreclosure is the "worst possible option for consumers, investors, and communities."