The Bush Administration is set to unveil its mortgage relief plan aimed at keeping more borrowers in their homes Thursday, the Treasury Dept. announced today.
Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson will also hold a news conference tomorrow to discuss the White House proposal.
The news conference will be held at 1:45pm EST, and will include members of the mortgage industry, as well as counselors and investors.
Sources close to the situation expect the plan to freeze interest rates on subprime mortgages for a period of five years, but likely only for borrowers who are currently up-to-date on their payments.
The Federal Deposit Insurance Corp. suggested a three year freeze, Fannie Mae recommended a two-to-three year freeze, and the Treasury Department’s Office of Thrift Supervision advocated between three and five years.
The freeze may be applicable to mortgages issued between January 2005 and July 2007 that are scheduled to reset between January 2008 and July 2010, with preference given to borrowers with credit scores below 660, according to a source who has seen the proposal.
Despite the excitement surrounding the release of the plan, a number of critics have continued to express skepticism regarding the proposal.
“My biggest concern is that there are a lot of Americans who are making their mortgage payments, they are current, and the benefit won’t go to them,” Representative Spencer Bachus, the top Republican on the House Financial Services Committee, told reporters after meeting with Paulson today.
Roughly 100,000 subprime loans will reset from their initial teaser rates every month for the next two years, according to UBS AG estimates.
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