Treasury Secretary Henry Paulson says that an agreement is near on a proposal to help thousands of at-risk homeowners avoid foreclosures by temporarily freezing their mortgage rates.
An estimated 2 million subprime mortgages — loans offered to borrowers with spotty credit histories — are scheduled to reset to much higher levels by the end of 2008. Those resets will push the payment on a typical mortgage up by $350 per month, taking it from $1,200 currently to $1,550.
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Subprime Categories
Group 1: Can afford higher mortgage reset
Group 2: Can't even afford teaser rate
Group 3: Can refinance
Group 4: Can afford teaser rate, but not reset
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The last item (in bold) is the most questionable, says Karen Finerman. And how do you figure out who falls into which category. We need the market to just flush out the bad loans, she adds. What we don’t need are politicians interfering with the process.
