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Now Paulson is Talking About Helping Prime Borrowers Too!
By JLP | January 8, 2008
Is there no end to the generosity of Hank Paulson?
According to, Will More Homeowners Get Help With Rates? ($), in today’s Wall Street Journal:
Treasury Secretary Henry Paulson suggested the mortgage industry should consider greatly expanding its White House-backed program to ease loan terms for millions of financially troubled homeowners whose mortgages are due to rise.
Mr. Paulson’s remarks yesterday mark the first time the Bush administration has hinted that the plan to expedite refinancing or freeze interest rates for cash-strapped subprime borrowers should also target homeowners who took out other kinds of adjustable-rate loans.
In a speech to the New York Society of Securities Analysts, Mr. Paulson suggested that the home-loan industry should use a “systematic approach for adjustable-rate mortgages other than subprime if it will benefit homeowners and investors” — a hint toward renegotiating loan terms to enable broad swaths of borrowers to keep up with their payments and stay in their homes.
Here’s what’s worrying Paulson:
Treasury officials have watched with alarm as foreclosures and delinquencies have hit prime-rate borrowers as well. Some 1.1 million prime-rate borrowers are 30 days delinquent, or about 3.1% of the 35 million prime-rate mortgages. More than 5% of adjustable prime-rate mortgages were overdue by a month or more.
Whether we realize it or not, we are quickly becoming a nation of victims who require the government to come to their rescue every time they make a bad decision.
Topics: Housing Market, Mortgages | 14 Comments »
January 8th, 2008 at 11:44 am
Maybe they should just cut our taxes and give everyone a break. Oh wait, that might help people that made wise financial decisions. Never mind . . .
January 8th, 2008 at 12:47 pm
Hey is there a list of cash strapped homeowners? Can I get my name on it? If I own 4 rental properties and a house, can I get on there 5 times?
Maybe all I have to do is skip a month or two of payments, nice.
January 8th, 2008 at 12:51 pm
The natural progression from democracy is to socialism.
January 8th, 2008 at 1:40 pm
I don’t understand why they don’t just let the system work it’s way out. Maybe what the USA needs is a good recession with the housing market leading the way. Perhaps it would turn some people from consumers in to savers.
Though, according to the storyofstuff.com that’s exactly not what big business and the government want.
January 8th, 2008 at 1:52 pm
Traciatim said:
“I don’t understand why they don’t just let the system work it’s way out.”
Because if the Bush administration allows that to happen, the Democrats will raise a stink. This is all political.
January 8th, 2008 at 2:11 pm
This is not socialism at all. Since when does the Bush administration support anyone but themselves or their supporters? Since when do they act like “socialists”?
If I had to guess, I’d call this a cynical ploy to stave off the collapse until a Democrat is elected president, so that he or she can be blamed for what we all know is coming. Why else would his spokesman say the other day that “no one is predicting a recession” which is laughably false? Their MO is to make foolish moves for short term political gain and that’s exactly what I see happening here.
“Avoid the recession before the election, long term consequences be damned”.
That’s my take, anyway.
January 8th, 2008 at 2:24 pm
Unabogie said:
“This is not socialism at all. Since when does the Bush administration support anyone but themselves or their supporters? Since when do they act like ’socialists’?”
Since when does ANY administration support anyone but themselves or their supporters? Bailing out massive numbers of borrowers is in fact socialism because it’s allowing people to stay in homes that they couldn’t normally afford.
January 8th, 2008 at 2:58 pm
I don’t see why people can’t let each other suffer the consequences of their actions. If you borrowed more than you could afford to, well then you need to bite the bullet. I am sorry if the Jones’ were able to purchase a house with a sub prime loan and then flip it for profit and you weren’t, but that is your problem not mine.
Now some people out there may have been victims of predatory lending. I do support helping them some. Proving that you were a victim of predatory lending may be difficult though, and personally I tend to the opinion that you brought it on yourself by not reading and making sure you understood everything. If the loan terms were over your head, you should have hired a third party to validate (or in most cases have *your* attorney review everything).
Okay so we have a poor housing market to deal with and the financial sector is having troubles dealing with it. I am of the mind that it is a hiccup (well probably more of a fit) that will pass with time and does not require meddling. As for a recession, it is avoidable if people sit back and realize their situations. Too many people are moving their investments based on emotion and over reacting to the Subprime problem.
January 8th, 2008 at 3:47 pm
Perhaps the headline should read, “What’s Really Worrying Paulson”?
In his remarks, Paulson noted the “overhang of unsold houses…poses by far the biggest downside risk” to the U.S. economy.
The two key words in Paulson’s speech were “credit
disruption”. The capital markets, and U.S. banking system,
are in a perilous position.
There is “off the record” chatter in this town (Washington,
D.C.), that Paulson is worried about a total financial meltdown if the record rate of foreclosures continues.
In short, Paulson is not trying to give anyone a break. He is trying to avoid a train wreck.
January 8th, 2008 at 4:20 pm
the people that are shouting “help me I borrowed to much!” are probably the same ones yelling “the government has too much power and is out to get me!!!”
January 8th, 2008 at 6:32 pm
What worries me is that a sitting executive official is talking about this. Does this mean that even the executive now thinks we’re heading into a deep recession?
Given who’s they are, I can’t imagine them doing this for any other reason.
January 8th, 2008 at 6:39 pm
lorax,
Only time will tell just how bad this is going to get.
I’m not in the doomsayers’ corner but I will say that financials and homebuilders are going to have a tough time. Those companies that survive are going to be bargains in the long run.
January 8th, 2008 at 9:44 pm
Will renters ever get some help?
January 11th, 2008 at 9:36 am
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