Foreclosure Plan Will Be Greeted With Questions
Treasury Secretary Henry Paulson will unveil a plan on Thursday to forestall foreclosures and ease the housing recession.
The release of plan’s details will coincide with the release of data from the Mortgage Bankers Association that show that homes in foreclosure hit record levels in April through June, and that nearly 17 percent of subprime borrowers missed at least one payment in the first quarter of the year. An additional 2 million home owners will face their first interest-rate reset by the end of 2008.
“This is the most serious housing recession since the Great Depression,” says Mark Zandi, chief economist for Moody’s Economy.com. Zandi predicts that home prices, on average, will fall 7 percent more through next year.
Paulson says he wants state and local governments to be allowed to issue tax-exempt bonds to “temporarily” raise money to help some struggling subprime borrowers refinance.
Questions remain about how many investors, who bought bonds backed by these mortgages and are spread out around the globe, will agree to change the terms of the loans.
Source: USA Today, Noelle Knox (12/4/2007)