The Treasury Department and a coalition of lenders are close to a deal to freeze interest rates on some subprime loans in a bid to bring the mushrooming mortgage crisis under control, reports the Wall Street Journal. A freeze would ease the burden on beleaguered borrowers and banks. Rates on some 2 million adjustable rate mortgages are scheduled to jump in the next two years.
Citigroup, Wells Fargo & Co., Washington Mutual Inc. and Countrywide Financial Corp. are involved in the negotiations as part of the "Hope Now Alliance." Support is even growing among investors, who stand to gain as mortgage rates increase. The American Securitization Forum, an industry association, has eased its opposition. "We support loan modifications in appropriate circumstances and are working to establish procedures to facilitate their delivery," said a spokesman.