Freezing Subprime Rates: good or bad idea?
Posted by admin under: Main Dec 09
Count me as one of the skeptics of the foreclosure relief plan that was unveiled by the Bush Administration on Friday. The White House estimates that the plan could help 1.2 million distressed homeowners, but I think that number will be far less. I also think this move will have a negative impact on the housing market.
Although the details still haven’t been worked out (sound familiar?), there is no question that as lenders factor in the added risk of having their contracts re-written or of being held liable for defaulting borrowers, lending standards for NEW loans will become increasingly severe: higher down payments, mortgage rates, and required FICO scores, lower loan to income ratios, and less available adjustable rate loans.
The result will be additional downward pressure on home prices, despite the fact that in the short term fewer homes will be sold in foreclosure than what might have been without the “rescue” plan. The move will install some confidence for a while and will help some struggling borrowers, but it’s definitely not enough. And it sounds like it won’t help that many Bay Area residents either: Rate freeze won’t help many in area (SJ Mercury News)
Source: Freezing Subprime Rates: good or bad idea?
Sunday, December 9th, 2007 at 2:47 am and is filed under Main. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.