Mortgage Refinance Help
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Update: You can read the President’s comments here, and see the entire proposal here. Here’s the soundbite I’ve seen on cable news a couple of times: ‘A federal bailout of lenders would only encourage a recurrence of the problem. It’s not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford. Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders, or a little help from their government.’
Old post: Here’s breaking news from the New York Times tonight: ‘President Bush, in his first response to families hit by the subprime mortgage crisis, plans to announce several steps Friday to help Americans who have credit problems meet the rising cost of their housing loans, administration officials said Thursday.’ The L.A. Times coverage is here.
Highlights of the N.Y. Times report: Bush will call for the Federal Housing Administration to expand mortgage insurance for homeowners with spotty credit, will ‘jawbone’ lenders, urging them not to foreclose on some borrowers, will focus his efforts on low-income homeowners, and will support legislation to provide tax breaks to homeowners whose mortgage debt is forgiven by lenders.
The Wall Street Journal has more on the FHA expansion: ‘Among the most tangible moves will be an administrative change to allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to guarantee loans for delinquent borrowers. The change is intended to help borrowers who are at least 90 days behind in payments but still living in their homes avoid foreclosure; the guarantees help homeowners by allowing them to refinance at more favorable rates.’
The L.A. Times points out that even government-backed insurance won’t save some borrowers who simply can’t afford the homes they’re living in: ‘Many people who took out adjustable-rate loans in recent years at low ‘teaser’ rates and now face sharp jumps in their payments, may be unable to afford any new market-rate loan, even with government insurance, experts say.’
Friday figures to be a newsy day -- Fed Chairman Ben S. Bernanke will also speak about housing issues, a speech closely anticipated on Wall Street, where traders will be looking -- and for the most part hoping -- for signs that the Fed intends to cut interest rates in September.
Comments? Thoughts? Insights?