White House Freezes Subprime Interest Rates

December 6th, 2007 by David | 623 views  |   Email This Post |  Invite Your Friends 

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Foreclosures in Northern Virginia, Maryland and Washington DC have been fueling price depreciation and a glut of housing inventory over the past several months. Today, the White House announced their policy to freeze subprime interest rates for 5 years in order to help hundreds of thousands of homeowners stay in their homes and avoid foreclosure. The deal with the mortgage industry is “a step in the right direction” after the increasing number of foreclosures have driven home prices down, hurt neighborhoods and threatened the economy.

The plan will not effect everyone facing foreclosure, but only consumers with subprime loans, which account for 47% of recent foreclosures. The plan only applies for people living in their homes and who have not missed any mortgage payments. Officials say they hope to save 300,000 families from falling victim to foreclosure proceedings and help curtail declining homes prices and access inventory over the next few years.

Many home owners unaffected by the plan are voicing their anger as they feel that the government should not step in to ’save’ people who made poor decisions to lock themselves in risky subprime loans…”Why should we have to pay for our high mortgage if subprime borrowers get an easy out?”

I’ll leave this up for discussion. Do you think the government should intervene in a situation like this? Should they specify only certain “subprime” borrowers? Is it fair to other homeowners facing foreclosure with similar adjusting rates that are not “subprime”?

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This entry was posted on Thursday, December 6th, 2007 at 4:08 pm and is filed under Foreclosure, Home Mortgages, Interest Rates, MD Real Estate, Northern Virginia Real Estate, Selling a Home, Short Sales, Virginia Real Estate, Washington DC Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

8 responses about “White House Freezes Subprime Interest Rates”

1. Sally Donovan said:
   December 7th, 2007 at 11:03 am

   These subprime loans are a very overwhelming issue for our country’s real estate market, and though this plan is far from fixing the situation, it is a good step in the right direction.

2. Richard said:
   December 7th, 2007 at 11:13 am

   It is good for the RE market, but more needs to be done. Hopefully this policy will be followed by a few interest rate cuts by the Fed.

3. david said:
   December 7th, 2007 at 11:24 am

   Some lenders are saying that it is hard to qualify for the plan. Homeowners must apply for the interest rate freeze, and there are many guidelines that minimize the eligible pool. There are a few tax relief bills that have been passed by the House and are waiting for the Senate for approval. This will eliminate any income tax penalties arising from debt forgiveness from short sales. The public really needs these bills to pass, lets keep our fingers crossed!

4. Lola Audu said:
   December 16th, 2007 at 8:31 pm

   This is a serious situation. While I am thankful that the government is taking initiatives to deal with the crisis…this will not resolve the underlying issues.

5. david said:
   December 16th, 2007 at 8:32 pm

   I agree Lola, subprime loans is a very overwhelming issue for country’s real estate market, and though this plan is far from fixing the situation, it is a good step in the right direction. Hopefully it will be followed by a few interest rate cuts by the Fed. I also heard that it is hard to qualify for the plan. Homeowners must apply for the interest rate freeze, and there are many guidelines that minimize the eligible candidates. There needs to be some kind of greater fix, such as a negative equity forgiveness or something of that nature to get the US out of this housing rut. I know there are a few tax relief bills that have been passed by the House and are waiting for the Senate for approval to eliminate any income tax penalties arising from debt forgiveness from short sales. The public really needs these bills to pass, lets keep our fingers crossed!

6. Ronald said:
   March 10th, 2008 at 8:10 am

   Really senate has taken a step in right direction where we can save many families from becoming homeless. The increasing number of foreclosures have driven home prices down only because of senate.

7. Herold said:
   March 20th, 2008 at 7:55 am

   It is great to hear about freeze subprime interest rates which helped thousands of homeowners to stay in their homes and avoid foreclosure. This has been come in to existence as the number of foreclosures have driven home prices down,hurt neighborhoods and threatened the economy.

8. Chad - Foreclosure Guy said:
   April 20th, 2008 at 8:10 pm

   With the sub prime rates froze hopefully families can start to dig themselves out of the financial stress of huge mortgage payments. I am glad to see the government is steeping in to stop the banks from screwing up more peoples lives than they already have.