Bush extends help to homeowners
President Bush on Friday outlined ways to help homeowners facing foreclosure - the administration’s first effort to deal with an expected wave of defaults fuelled by the mortgage crisis.
By Agencies |
WASHINGTON: President Bush on Friday outlined ways to help homeowners facing foreclosure — the administration’s first effort to deal with an expected wave of defaults fuelled by the mortgage crisis. The initiatives, which are not aimed at bailing out lenders or speculators, are designed to help homeowners with risky mortgages keep their houses. In remarks in the Rose Garden, Bush also discussed efforts to keep the problems from arising in the future.
“The government’s got a role to play, but it is limited,” Bush said. “A federal bailout of lenders would only encourage a recurrence of the problem.” The president insisted that the US economy was strong and could weather recent turbulence in the financial markets. He said the mortgage market, especially the subprime sector, has shown particular strain. One of the most troubling developments has been an increase in adjustable-rate mortgages, which start out with low interest rates, then reset to higher rates after a few years.
“This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market,” Bush said. “Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure.”
A key element of Bush’s plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.
On Friday, Bush:Urged Congress to pass legislation that would give the Federal Housing Administration more flexibility to help mortgage holders with subprime mortgages.
Pledged to work with Congress to reform the tax code to help troubled borrowers rework their loans.Called for rigorously enforcing predatory lending laws and strengthening lending practices.
The economy enjoyed a strong revival in the spring although growing troubles in housing and credit markets have darkened prospects considerably since then.
The Commerce Department reported Thursday that the gross domestic product grew at an annual rate of 4% in the second quarter — the strongest showing in more than a year. But that growth could be the best showing for some time as the economy continues to be battered by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller-coaster ride in recent weeks.
Also Read:
Bernanke won’t bail out lenders
“The government’s got a role to play, but it is limited,” Bush said. “A federal bailout of lenders would only encourage a recurrence of the problem.” The president insisted that the US economy was strong and could weather recent turbulence in the financial markets. He said the mortgage market, especially the subprime sector, has shown particular strain. One of the most troubling developments has been an increase in adjustable-rate mortgages, which start out with low interest rates, then reset to higher rates after a few years.
“This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market,” Bush said. “Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure.”
A key element of Bush’s plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.
On Friday, Bush:Urged Congress to pass legislation that would give the Federal Housing Administration more flexibility to help mortgage holders with subprime mortgages.
Pledged to work with Congress to reform the tax code to help troubled borrowers rework their loans.Called for rigorously enforcing predatory lending laws and strengthening lending practices.
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The economy enjoyed a strong revival in the spring although growing troubles in housing and credit markets have darkened prospects considerably since then.
The Commerce Department reported Thursday that the gross domestic product grew at an annual rate of 4% in the second quarter — the strongest showing in more than a year. But that growth could be the best showing for some time as the economy continues to be battered by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller-coaster ride in recent weeks.
Also Read:
Bernanke won’t bail out lenders
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