This is potentially very big news for anyone who signed onto a sub-prime loan in the past two years. Apparently the Bush Administration is brokering a 5 year freeze on the resets-the time when these loans are set to adjust.
Here's a part of the story:
The Bush administration has hammered out an agreement to freeze interest rates for certain subprime mortgages for five years to combat a soaring tide of foreclosures, congressional aides said Wednesday.
The aides, who spoke on condition of anonymity because the details have not yet been released, said the five-year moratorium represented a compromise between desires by banking regulators for a longer time frame of up to seven years and mortgage industry arguments that the freeze should last only one or two years.
Another person familiar with the matter said the rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.
I don't think I am being too cynical when I say I will believe it when I see it. That is a HUGE pile of money that Wall Street will be asked to leave on the table and I can't believe they would accept this willingly.
Stay tuned...
Subscribe to:
Post Comments (Atom)
1 comment:
TJ -
You can expect this plan to apply to only a very narrow subset of subprime mortgage borrowers. Details that have leaked so far: those with credit scores under 660, with little or no equity on their homes, who can afford the current rate (AND are current,) but not the adjusted rates.
Once they come up with that "fast track" list, (which will be vainishingly small relative to the total number of Sub-Prime ARMS,) it remains to be seen how many are willing and able to actually participate, since they will need to document income, assets, credit, etc.
At the end of the day, we don't expect much true relief from this, but it will make great headlines and PR for "doing something."
But hey, it'll be a positive headline, right?
Alex
www.behindthemortgage.com
Post a Comment