Bush Subprime Plan Announced

by Darren

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The U.S. government is getting involved in the so-called “subprime” crisis, by initiating a plan to bail out certain homeowners with adjustable rate mortgages (ARMs). The thought is that the plan to free rate increases will slow the record number of foreclosures, giving consumers a chance to hold on to their homes.

The plan hammered out by the Treasury Department in talks with mortgage industry leaders would bring relief to many of the 2 million homeowners who took out adjustable rate loans
with payments due to move sharply higher in the next year or so by offering some of them a five-year mortgage-rate freeze.

Officials fear 500,000 Americans are at risk of losing their homes as $367 billion worth of adjustable-rate subprime mortgages reset to higher interest rates in 2008 and 2009.

The Mortgage Bankers Association said foreclosures reached a record high in the third quarter, with 1.69 percent of loans outstanding in the foreclosure process. Late payments on mortgages hit the highest level since 1986.

Of course not everyone is happy with the plan. The plan will not bail out speculators, who were looking to make a quick buck by “flipping” houses when the real estate market was red hot.

People will poor credit will still lose their houses.

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