Released: December 01, 2007

Mortgage freeze for subprime loans?

Source: David Cho, Washington Post (Paid Registration)

Mortgage rates for homeowners with spotty credit histories would be temporarily frozen under a nearly completed agreement between top Bush administration officials and a broad alliance of Wall Street’s biggest banks, mortgage investors, nonprofits and consumer groups.

The plan, which could be announced next week, is designed to prevent soaring mortgage delinquencies from escalating into a full-blown foreclosure crisis that would threaten the broader economy, according to several people involved in or familiar with the discussions.

The agreement focuses on aiding many of the 2 million credit-challenged, or subprime, borrowers who, at the peak of the real estate boom in 2005 and 2006, bought houses with mortgages that offered low teaser rates that rise after the first two or three years of the loan.

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