Agreement Near On Industry-Wide Effort To Freeze Mortgage Rates
Monday, December 3rd 2007, 9:57 am
By: News On 6
WASHINGTON (AP) _ Treasury Secretary Henry Paulson said Monday he is confident there will soon be an agreement to help thousands of homeowners avoid mortgage defaults by temporarily freezing their interest rates.
Paulson told a national housing conference that this effort involved a ``pragmatic response'' to current realities as the economy goes through the worst housing slump in more than two decades. The number of homeowners struggling to meet higher payments because their initial introductory rates are resetting is currently soaring.
Paulson and other top Treasury officials have been holding talks with major players in the mortgage industry over the past several weeks to hammer out an agreement that would freeze the lower introductory rates to keep them from resetting to higher levels for a period of years.
``We are working aggressively and quickly, utilizing available tools and creating new ones, to help financially responsible but struggling homeowners,'' Paulson said in a speech to a national housing conference sponsored by the Office of Thrift Supervision.
One of the outstanding issues is how long the freeze will last. Some government regulators are pushing for five to seven years but investors, who will see lower payments on the loans, are arguing for a shorter period of one to two years.
An estimated 2 million subprime mortgages, loans offered to borrowers with spotty credit histories, are scheduled to reset to much higher levels by the end of 2008. Those resets will push the payment on a typical mortgage up by $350 per month, taking it from $1,200 currently to $1,550.
Paulson said he believed the disagreements can be resolved without delay. Some expect the administration to unveil the completed deal later this week, but Paulson was not as specific in his remarks, saying only, ``I am confident they will finalize these standards soon.''