ABC News has an interview with Treasury Secretary Henry Paulson in which he says that the administration’s plan to help subprime borrowers is nearing completion.
The plan is “industry sponsored” and would offer rate freezes to those homeowners who have the “capability” to own a home, but will lose theirs when the rates reset.
“If there was ever a role for government, it’s to help facilitate a solution when innovation has outrun the private sector’s ability to deal with it,” said Paulson. “And there’s been a lot of innovation and complexity in the mortgage market, and we need to do everything we can to help get the industry ready to meet the growing number of resets that are going to be coming in the subprime mortgage market.”
By innovation does he actually mean “corruption” or “incompetence?” We’re not sure. Anyway:
The plan would establish guidelines for lenders to freeze payments for homeowners who qualify for the program. Paulson said the program would be completely voluntary, and only some borrowers would qualify.
He said homeowners who can handle an increase in payments and those who don’t “have the financial capability to own a home” will not be offered an interest-rate “freeze.”
“We’re focused on those in the center — the middle group — that are going to have a problem meeting their payment, but it’s in the industry’s interest to come up with a solution to help them stay in their homes.”