President Bush will detail tomorrow the Treasury Department's plan to hold interest rates steady for subprime borrowers at risk of defaulting on their mortgages when rates rise, Reuters reports. The plan, negotiated with mortgages lenders and investors, would freeze for five years adjustable loans due to jump to higher rates between Jan. 1, 2008, and summer 2010.
The deal would most benefit homeowners who are reasonable credit risks but couldn't afford a higher payment; borrowers who haven't kept up as well with payments could also qualify under certain conditions. “Fixing the reset period is an important action,” one professor tells Bloomberg. “Now the question is what additional steps are required to keep people in their homes.”