Rate freeze for subprime borrowers on the way?
Thursday, December 6th, 2007It looks as if Washington has developed a plan to freeze interest rates for up to five years for thousands of strapped American homeowners whose mortgages were scheduled to rise in the near future.
The unprecedented move is designed to shore up the ailing economy, which is slowing amid a downturn in consumer confidence, triggered by the stumbling housing market.
The program is the biggest attempt so far to deal with surging levels of foreclosures and mortgage defaults, which have accrued billions of dollars in losses for the stock market.
Lenders will not, however, be forced to join up to the proposal, which emerged from negotiations between the Treasury Secretary, Henry Paulson, and the beleaguered US mortgage industry.