Subprime Rates To Be Locked For 5 Years

From the East Valley Tribune:

“The Bush administration has hammered out an agreement with industry to freeze interest rates for certain subprime mortgages for five years in an effort to combat a soaring tide of foreclosures, congressional aides said Wednesday.

…Another person familiar with the matter said the rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.”

From Bloomberg:

“Treasury Secretary Henry Paulson is finalizing the deal as the housing recession enters a third year, threatening the economic expansion. Paulson and Housing and Urban Development Secretary Alphonso Jackson will hold a press conference tomorrow at 1:45 p.m. in Washington to discuss the plan, Treasury said in a statement.”

From WNBC:

“Congressional aides said the Bush administration has worked out an agreement with the mortgage industry to freeze some mortgage rates.

Interest rates for certain subprime mortgages would be frozen for five years in an effort to deal with a rising number of foreclosures.

The sources said it's a compromise between banking regulators who wanted a longer time frame of as much as seven years and industry arguments that the freeze should just last a year or two.”