WASHINGTON (12/7/07)—The Bush administration Thursday announced an agreement with major mortgage servicers to freeze interest rates for five years for certain subprime mortgage borrowers who are facing steep interest rate resets that may make their loans no longer affordable. The rate freeze would be available to homeowners who took on adjustable-rate subprime mortgages between Jan. 1, 2005 and July 31, 2007. The agreement promises to accelerate the process for these borrowers seeking to refinance their mortgages through lenders or state and local housing authorities. According to the White House, up to 1.2 million homeowners could be eligible for assistance. The plan was developed by HOPE NOW, an alliance of mortgage servicers, mortgage counselors, government officials and non-profit groups formed this Fall under the auspice of the Treasury Department. In addition to the five-year freeze, HOPE NOW members have agreed on other industry-wide standards to help provide systematic relief to these targeted borrowers:
* Refinancing existing loans into new private mortgages; and * Moving them into an FHASecure loan.
President George W. Bush also called on Congress to act, specifically pressing for passage of his proposal to modernize the Federal Housing Authority, to fund mortgage counseling and to make changes in the tax code to help troubled homeowners. The President sought to assure the country that it would weather the subprime storm. He said America's economy has proven itself “highly resilient -- and it is strong, and it is flexible, and it is dynamic enough” to withstand its current housing and credit market problems. However, he added, “For individual homeowners, the problem is more difficult.” He called the threat of foreclosure a “terrible burden for hardworking families, and a source of concern for entire communities and neighborhoods across our country.”