Bush Announces Mortgage Plan to Help Homeowners
President Bush’s described in detail his Foreclosure Rescue Plan 2008 on Thursday in an official statement. He said the US government will help 1.2 million homeowners which are currently living on the edge of financial chaos and can’t payoff their mortgages and need to sell there houses immediately.
The proposed program allows a five year stop in the raising interest rates only for borrower’s current with their monthly payments. It will give distressed borrowers more breath during the mortgage modification process and thereby will it offer relief to homeowners more quickly,” President Bush added to his statement today.
Although for some homeowners it is a generous offer the plan is limited. It excludes homeowners that are more than 30 days late at the time the mortgage would be modified or who has been more than 60 days due within the last 12 months. This certainly will not help the homeowners that need help most urgently because of delay in interest payments.
Thereby it also covers borrowers with short term adjustable rate mortgages (ARMs) only. Start counting for the beginning in 2008 and stops at any who are labeled to be capable of paying the monthly mortgage at the new higher interest rates. Borrowers who can’t afford the loan payments even at low rates will be ineligible for this offered solution also.
1.2 million homeowners will benefit from this rescue mortgages foreclosure plan is promised but of the 2200000 sub prime mortgages with adjustable rates that are expected to be adjusted by end 2008, only 240000 will be covered by the provided plan. This according to a recent analysis made by Barclays Capital investment bank.
So is this Rescue Mortgage Plan 2008 postponing the public execution of the US economy or will it be the Hand of God that saves us from crashing into a hardcore landing followed by a recession and cooling down of global economies. We think the amount of homeowners which are covered by this interest freeze deal will be limited so exposures and risks will keep teasing the markets. As long as homeowners can’t pay there monthly bills houses need to be sold but at the other side nobody can buy or lend money for mortgages because of the current credit crunch.
