In an attempt to combat the current wave of foreclosures in the housing sector the Bush Administration in conjunction with the mortgage industry are proposing a temporary freeze in interest rates on some sub-prime mortgages. While this is not a sure thing, if it is adopted it will be one of the biggest actions taken to date to deal with the looming crisis.
The current talks include everyone from banking regulators key personnel in the mortgage industry such as Wells Fargo and Citigroup inc.
In the current offering these financial leaders are proposing extending for a number of years the lower, introductory rates that were offered on sub-prime mortgages, loans usually offered to borrowers with weak credit histories. This change would effect an estimated 2 million homeowners who entered the market at initial teaser rates that are now scheduled to reset at much higher rates by the end of 2008. If the industry does nothing to stop this increase the typical home mortgage could rise from $1200 per month to $1550 per month, an increase of $350. As a result the fear is that many of these homeowners will be forced to default on their existing loans triggering hundreds of thousands of foreclosures.
[tags]mortgage, interest rates, mortgage crisis, freeze mortgage, sub-prime loans, subprime loans, Wells Farge, Citigroup, foreclosure, Bush Administration, credit histories, credit, loans[/tags]