ECONOMY OF APATHY:On Thursday, President Bush stood with Secretary of the Treasury Henry Paulson and Secretary of Housing and Urban Development Alphonso Jackson to announce an agreement with the mortgage industry to provide relief to families facing home foreclosures.
"The holidays are fast approaching and, unfortunately, this will be a time of anxiety for Americans worried about their mortgages and their homes. There's no perfect solution, but the homeowners deserve our help," Bush said.
His plan would freeze mortgage rates for some troubled borrowers. Yet the vast majority of Americans facing foreclosure would be left out by the Bush plan, including the record 351,000 people who fell into foreclosure in the third quarter of this year. The deal asks for only a voluntary freeze on interest rates, and does not require congressional approval or funds.
The effects of the subprime mortgage crisis have spread throughout other sectors of the economy, an estimated 800,000 Americans have are already faced foreclosure since mid-2007, and 3.5 million loans are expected to default before the end of 2010.
Although Bush's plan will offer substantial help to thousands of families, it is, as The New York Times editorial board described it, "too little, too late and too voluntary." Andrew Jakabovics of the Center for American Progress said, "As with other serious crises that have happened on Bush's watch, the solution is to make it the next administration's problem."
SMALL HELP FOR THOUSANDS:
After months of ignoring the mortgage crisis, Bush's acknowledgment of the problem is certainly a step in the right direction.
For those who qualify -- an estimated 250,000 borrowers -- Bush's plan would give them a five-year freeze on their adjustable loan rates. "Bush will also ask Congress to temporarily expand the authority of states and localities to issue tax-exempt mortgage-revenue bonds to help people refinance their mortgages."
Further, those borrowers who do not qualify for a rate freeze can still receive help from mortgage counselors, who can walk them through the process of refinancing and help them stay on top of their payments.
Secretary Paulson described the HOPE NOW program as "a coalition of mortgage servicers, counselors and investors that are working to avoid preventable foreclosures and to improve the functioning of the mortgage markets." Paulson said that 50 percent of foreclosures occur "without borrowers ever talking with a mortgage counselor."
The HOPE NOW program, which will use a national letter campaign as well as other publicity efforts to reach homeowners, will thus provide needed assistance and advice to millions of Americans unsure of how to cope with rising interest rates. Additionally, some homeowners may be able to refinance into private, fixed-rate mortgages, or use Federal Housing Administration loans.
Stumble It!Definitions provided by: U.S. Property Definitions
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