Paulson defends mortgage rescue
December 7th, 2007, 7:23 am · 9 Comments · posted by Mathew Padilla, Reporter
In the Wall Street Journal’s editorial pages, Treasury Secretary Henry Paulson today made the case for President Bush’s mortgage rescue plan. Bush brokered a nonbinding deal with some loan servicers, encouraging them to allow subprime borrowers with adjustable rate mortgages to keep their low introductory rates for five more years if they cannot afford the higher payment after the teaser rate is set to end. (The plan is actually more complicated than that. To read more on Bush’s current and previously announced plans CLICK HERE.)
Here’s a clip from Paulson …
In the next two years, we will face a rising volume of subprime mortgage resets, and we expect a dramatic increase in the number of borrowers who will struggle to make their payments at these higher rates. Investors and mortgage industry participants recognize that their traditional process will be overwhelmed and unable to handle the higher volume of borrowers seeking assistance. In such a diffuse industry, no single firm could convene all investors to streamline the current cumbersome, loan-by-loan process. This suggested a role for government, to bring the private-sector participants together so they could develop solutions they could not reach acting individually. By convening a large group of servicers and mortgage investors, we facilitated their work to improve their outreach and develop an industry-wide, streamlined response to struggling borrowers. Because these industry standards are the product of investor and servicer discussions, the risk of litigation should be manageable.
To read the full piece CLICK HERE. (You may have to be a paid subscriber to the Journal to read it.)
Reuters did a story on the Paulson piece, which you can see by CLICKING HERE.
December 7th, 2007 at 7:58 am
It is an idiotic plan and it will not work. Even if the lenders were to follow the plan, it would only prolong the slide in prices and in effect make the situation worse for most.
Just one more example of our government pretending to do something that helps the people and makes everyone feel a little better.
Lenders do not need government to tell them what is in their best interests. In their view, this plan amounts to nothing more than a threat of worse legislative intrusion into their business. These loans are private contracts by they way, so government is not going to be able to force lenders to change their terms.
If the democrats win next year, watch your wallets because they will actually do something about the situation, using your tax money of course.
December 7th, 2007 at 10:26 am
So stupid this plan.
Geee, I can’t afford to buy a Ferrari. Hey wait, I’ll try to buy it on my line of credit and if they try to take away because I can’t afford the rising interest rates, the government can keep the payments low so I can drive this car for another 5 years before I have to give it back.
Mmmm… so why not just drive a Camry? IN other words, WHY DON’T YOU PEOPLE JUST RENT. Sheeeesh.
Stupid government logic.
December 7th, 2007 at 11:30 am
This plan is nothing more than a PR stunt by the white house to make it look like they care about mr. and mrs. subprime. Administering this program will be a nightmare…….who will pay for all of the background checks required on income, credit, home value.
December 8th, 2007 at 7:11 pm
Hey Mr. B. what happened to the conservative belief in the free market? I guess it requires government intervention. Like bailing out big business. A bit contradictory.
December 10th, 2007 at 7:55 am
The mortgage rescue plan give the appearance to help some people that had taken a chance to buy a home for nothing. The rescue plan is just planely to rescue the mortgage bankers or bond holders - not the homeowner. This is were the money is. The mortgage industry is the one that messed-up and the fed’s let them do it. I you believe the government is really trying to help the homeowner, look closer.