US Treasury is Requesting Lenders Help Those Facing Big Resets
Henry Paulson, Secretary of the US Treasury, is asking that the various mortgage lenders help those that are about to lose there homes due to big resets. However, how this was to be accomplished was not discussed in detail. Unless there is something going on behind the curtain, I am not sure what he thinks these comments will accomplish. From Yahoo:
Treasury Secretary Henry Paulson said on Wednesday a recovery in the subprime mortgage market will be slowed by a wave of interest rate resets and urged lenders to help troubled borrowers.
Speaking to mortgage servicing executives at the Treasury, Paulson called on lenders to expand the range of mortgage products to refinance loans made unaffordable by resets. What can you do besides put them into 30-year fixed, assuming they qualify.
"Unlike periods of financial turbulence I've witnessed over many years, this turbulence wasn't precipitated by problems in the real economy. This came about as a result of some bad lending practices," Paulson said.
Paulson said turbulence in some markets would be worked out more quickly than others. "The subprime market will take longer than other markets because of a number of these resets taking place over the next 18 months to two years," he said. (my emphasis)
He said he was discussing options to expand the availability of mortgage products for this purpose with the government-sponsored housing enterprises Fannie Mae and Freddie Mac and other mortgage product providers. However, he did not mention any specifics.
Paulson said the Bush administration's efforts to provide assistance to financially stressed borrowers was not focused on helping housing speculators caught out by the real estate downturn.
"We're focused on homeowners where it's their primary residence, finding ways to keep them in their home," he added.