Filed under: Good news, Citigroup Inc. (C), Washington Mutual (WM), Wells Fargo (WFC), Housing, Federal Reserve
U.S. Treasury Secretary Henry Paulson is negotiating an agreement with banks and other lenders to limit the surge in foreclosures by fixing interest rates on loans to subprime borrowers, people familiar with the Thursday meeting said, Bloomberg News reported.
“We’ve all agreed that there should be some sort of standardized approach to reaching more homeowners faster,” U.S. Treasury Department spokeswoman Jennifer Zuccarelli told The Associated Press.
Subprime mortgages worth about $362 billion are expected to reset to higher interest rates in 2008, according to BusinessWeek magazine.
Market chatter Friday speculated on the plan’s form, with no consensus readily emerging so far. Some Wall Street analysts expect Paulson’s plan to focus on middle-income loans, excluding higher-income borrowers on the belief that they will able to obtain better terms themselves, and excluding lower-income borrowers who would not be able to afford their mortgage, even after a refinancing. Other analysts suggested that the plan may be more encompassing — “capping” or limiting interest resets to predetermined rates.
Continue reading Early holiday present: Subprime package seen likely
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