Helping Wall Street Survive and Calling It Help for Homeowners
Deal in the Works To Freeze Rates on Subprime Loans
By David Cho
Washington Post Staff Writer Saturday, December 1, 2007; Page A01
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.
. . . A potential sticking point is determining which homeowners would qualify for the help and how much they would have to pay to refinance or freeze their loans, several sources close to the discussion said.
. . . Most borrowers with questionable credit got subprime rates of 7 to 8 percent in 2005 and 2006, federal housing officials said. When the rates reset, they could rise to 10 percent or more. An interest rate increase to 10 percent from 7 percent on a $200,000 loan increases monthly payments by more than $400, to $1,755 from $1,331.
. . . If mortgage lenders agree to freeze the loans a…