This plan won't do anything to help anyone. Someone with a 500 FICO will still default eventually. Now instead of defaulting in 6 months it will take a year or a year and a half. All this will do is delay the inevitable. What the monkey who lives at 1600 Pennsylvania Avenue doesn't get is that this will actually hurt housing even more. What they are doing is essentially saying a contract no longer matters. The contracts signed stipulated a rate change after 2 years. Those contracts are now being used to wipe the ass of Republicans on Wall St after eating their $175 steak dinners.
However what this also does is spell the end of ARMs. If a lender knows he cannot expect a contract to be honored and enforced, he will no longer issue that contract. And without ARMs, fewer buyers will be out there. This will hurt prices as badly if not worse than the current situation.
Let me translate that for you. Bush's message to anyone who has a fixed mortgage, who isn't a deadbeat, who's carefull with their money, who didn't didn't gamble and lose by being irresponsible....to all of you....GO FUCK YOURSELF.
WASHINGTON (AP) -- The Bush administration and the mortgage industry, trying to combat a massive wave of foreclosures, are hammering out a proposal to temporarily freeze interest rates on certain troubled subprime mortgages. If adopted, it would be the biggest action taken to cope with the unfolding crisis.
The talks have involved all the federal banking regulators and major players in the mortgage industry such as Citigroup Inc., Wells Fargo & Co. and Countrywide Financial Corp.
The major thrust of the proposal would be to get lenders to extend for a number of years the low, introductory rates that were offered on subprime mortgages, loans usually offered to borrowers with weak credit histories.