New Bush Proposal for Struggling Homeowners
Brian D. Montgomery, FHA commissioner, announced on April 9th the latest proposal by the Bush Administration to address the foreclosure crisis currently deranging the American economy. Essentially, the repartee between Republicans and Democrats amounted to more of the same: the Bush administration proposed an expansion of FHA Secure that could help 100,000 borrowers by year’s end.
The program would allow struggling borrowers to refinance their mortgages to 30-year, fixed-rate loans insured by the federal government. Geared toward homeowners who have shown an effort to make payments despite financial hardship, the plan would allow those two and three months behind on mortgage payments to refinance.
The plan would also make insurance premiums paid by borrowers with federally-backed loans priced on a risk basis to “protect” the government and taxpayers from potential defaults.
Democrats, on the other hand, are pushing for a more aggressive plan that could, according to Representative Barney Frank (D-MA), help 1.2 million Americans save their homes. Naturally, Republicans criticized the proposal as too lenient toward “irresponsible” borrowers and reckless lenders, insisting that the market will work itself out if more or less left alone.