An administration official stated on Tuesday that the White House was involved
in discussions with mortgage industry officials about expanding the current interest
rate freeze program announced shortly before Christmas to other at risk borrowers.
Secretary of the Treasury Henry Paulson, in an interview on CNBC said that
the administration was discussing expanding the HOPE
NOW alliance to include borrowers with adjustable rate loans who do not
fall into the subprime category.
"One thing we will consider," Paulson said, is "maybe expanding this
beyond subprime borrowers to other borrowers."
The program, as originally announced, would freeze interest rate increases
on sub-prime mortgages, particularly those with initial "teaser"
rates for five years as long as the borrower was current on mortgage payments
and met other criteria established by the owner of the mortgage. It was clear
that this freeze would apply to only a limited number of those who were due
to be affected by interest rate "resets."
Current discussions involve including borrowers who have adjustable rate mortgages
at prime rates. Subprime rates are usually given to borrowers with flawed credit
Paulson also called on Congress to complete passage of so-called FHA
reform legislation which, he said, would help 250,000 at-risk homeowners
with subprime ARMs. This legislation has passed both the House and the Senate
but is awaiting conference committee meetings which will, hopefully, iron out
inconsistencies between the two versions of the bill before sending a final
bill to the President for his signature.