President Bush’s goal of helping subprime borrowers by offering tax-exempt bonds is meeting resistance from state lenders, Bloomberg reports. Risk-averse state housing agencies are already turning down over half the applicants to their own programs intended to help those affected by the crisis, due mainly to applicants’ existing financial woes. The agencies’ caution could cripple Bush’s scheme to fight foreclosures.
States’ ambitious programs have yielded weak results: New York has made only three of the 500 loans it originally estimated, and Massachusetts has made four with an allotted $250 million. “Often the borrower just has too much debt and the home does not have the value to support the refinancing,” said one official at mortgage-insurance giant MGIC.