Bush's Plan For Foreclosure Rescue
This week, President Bush announced his plan to help homeowners struggling to pay their mortgages and facing foreclosure.
The plan includes a five-year freeze for interest rates on certain mortgage loans, but many critics have written the plan off as too little, too late. For a detailed explanation of the Anti-Foreclosure Plan, please follow this link.
The plan involves allowing lenders to "freeze" certain mortgage rates that are scheduled to reset between Jan. 1, 2008, and July 31, 2010. The "freeze" will last for five years. The idea is that if borrowers are given a little breathing room, the number of foreclosures can be held down.Most of the loans that will reset in the next two years were long ago bundled into securities and sold to investors. The value of these securities has already fallen. A freeze in interest rates would reduce the value of these investments even more. So some investors will consider going to court in order to stop the plan to freeze rates. Other investors have decided that fighting the freeze will only lead to more foreclosures — and an increased chance of recession. And that, they have concluded, isn't good for anyone.