Paulson Announces Potential Break on Subprime Mortgages
In a national housing conference and interviews Monday, Treasury Secretary Henry Paulson noted that an agreement between federal regulators, many of the country's largest banks, mortgage investors, and consumer groups could mean breaks for borrowers with subprime mortgages about to reset, according to various news sources.
The deal is designed to help "financially responsible but struggling homeowners," according to Paulson, and will aim to keep families in their homes. As of now, the negotiators plan to include a test of primary residence in the agreement: those having difficulty paying the mortgages on investment properties will not be eligible for the help, while those struggling to pay the mortgages on their homes will.
The main feature of the agreement will be a freeze on mortgage rate resets for a period of time that has not yet been agreed upon. Reports indicate that consumer groups are pulling for a longer period (five to seven years), but lenders and mortgage investors want a shorter period.
Paulson has announced that a final decision on these measures should be reached soon, possibly before the end of the week.