House Foreclosures - Bush Plans For Foreclosure Crisis

Bush Plans For Foreclosure Crisis

December 7th, 2007

Bush is no longer beating about the bush – he will come out with definite plans this week, regarding freezing interest rates for five years for certain types of mortgage holders. It is surmised that he has worked out a deal with leading lending firms.

In the forthcoming year about 2 million persons are about to face foreclosures because the rate of interest on these sub-prime mortgages are expected to reach dizzy heights. It will be beyond the affordability of the borrowers. Some of the rates are expected to jump 12% higher than what it was till now.

The President’s move comes fresh on the wake of rumblings about depressions in the real estate market. The third quarter showed all time high figures. According to the Mortgage Bankers Association that the percentage jumped to a record 0.78% between July to September. It was higher than the previous high jump of 0.65% in the second quarter. The delinquency rate rose to 5.59% in the last quarter – up by 5.12% from the second quarter and the highest peak reached since 1986.

Everybody is not happy with five year freezing being introduced by Bush. The demand had been for seven years. The mortgage industry was not willing to wait beyond two years.

This moratorium will apply to those borrowers who had taken loans between January 2005 and July 2007. It is these that are supposed to rise to higher notches from January 2008 to July 2010. The cease-fire will enable borrowers to refinance their loans through the lenders or other state cum local authorities.

This freeze will be only for those who show that the have the income to pay the low mortgage rates. Also they must be residents of the house under question. By these stipulations speculators and investors will be excluded from the plan.

Previously President Bush and big wigs like the chairman of the Federal Reserve Ben Bernanke had admitted that there were many borrowers were unknowingly made to swallow these loans.

Today with millions being crushed under by the triumphant chariot of foreclosures it is not only the borrowers who are affected but the stench is spreading far and wide sparing none. Investors across the globe are having hiccups. Mortgages did not remain with the original lender but were bundled and sliced off to distant shores. Citigroup, Merill Lynch, Countrywide Financial amongst others are all being sucked into the quicksand of foreclosures.