Bush Pledges FHA Help for Subprime Mortgage Borrowers
President George W. Bush today pledged to help people who have fallen behind in their mortgages keep their homes and to tighten safeguards against predatory lending, while rejecting a bailout for “speculators.”
“I plan to help homeowners. The government’s got a role to play,” Bush said in a statement at the White House. But, he said, “It’s not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.”
Bush said he will let the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, guarantee loans for delinquent borrowers, allowing them to avoid foreclosure and refinance at more favorable rates.
Tighter credit and higher borrowing costs threaten the housing market, which has been an engine of U.S. economic growth. At the end of last year, there were 7.5 million subprime mortgage borrowers with $1.4 trillion in loans, according to the Center for Responsible Lending, a research organization in Durham, North Carolina. More than 2 million Americans will lose their homes as introductory interest rates on mortgages reset to higher levels in coming months, according to the center.
