Bush aims to ease US mortgage woes: report
US President George W. Bush is set to announce for the first time a series of measures aimed at easing the US mortage crisis marked by rising defaults and foreclosures, US media said Friday.
The proposals target homeowners who have fallen behind on their mortgages and are the administration’s first official response to the troubled US housing sector which has riled world markets over the past several months.
Among the measures include a program that would allow people to refinance with government insurance if they are unable to pay adjustable rate mortgages, which offer low introductory rates but can rise over time, the Washington Post said.
One senior administration official estimated that “the change would allow 80,000 more homeowners to receive federally insured mortgages in 2008 on top of the 160,000 already projected to use the program,” it said.
The Federal Housing Administration mortgage insurance program provides insurance on loans in order to make them less risky for lenders and to lower the cost to the borrowers.
“The administration’s plan would make FHA loans available to people with worse credit histories, though with higher insurance premiums to cover the increased risk,” the Post said.
Higher insurance premiums would allow the federal agency to insure a larger number of high-risk borrowers.
Bush also want to raise the limit of loans that the FHA is allowed to insure from its present level of 362,790 dollars to 417,000 dollars.
Another proposal would be to temporarily suspend a law that makes homeowners liable for taxes on any amount of mortgage debt that is forgiven by the lender, the Los Angeles Times said.
“A suspension of the debt-forgiveness tax could help people who are hoping to work out a reduction in their loan balance — and payments — as a way of avoiding foreclosure,” the paper said.
Around two million US homeowners have adjustable rate mortgages.
The collapse of the subprime mortage sector, surging home foreclosures and a slump in home sale prices have jolted financial markets and raised concern among economists already seeing faltering US growth in the coming months.
© 2007 AFP
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