WASHINGTON (AP) — 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.
Morgan asks whether it’s best to rip the band-aid off slowly or quickly. I honestly don’t know the answer. My hope would be the market would be better able to absorb failing loans down the line than it can now.
The first wave of inventory came from the speculators rushing for the exists and the second wave of short sales, foreclosures and the like came before the first wave was absorbed.
I’ll be the first to admit that could be a naive view of things. But unless others shared that hope, then this move would be utterly pointless.
Perhaps it still is.
[tags]real estate financing, Phoenix real estate[/tags]