Bank Regulators Ask Lenders To Work With Borrowers

The Palm Beach Post reported today that the FDIC and Federal Reserve have asked lenders to work with homeowners who are struggling to pay their loans.  Many consumers with subprime and hybrid mortgages have found themselves unable to pay their mortgage due to the higher interest rates incurred under the current terms of their mortgage.   Current accounting and tax rules allow creditors to use flexibility and work with consumers who, under normal circumstances, are timely with their payments.  The guidelines were prompted by President Bush’s announcement Friday to proactively preempt further defaults over the next couple of years.  Two million mortgages are expected to move from low interest rates to higher unaffordable rates by 2008.  Some strategies mentioned to ward of defaults included modifying the terms of the loan, deferring payments or converting adjustable mortgages to fixed rate mortgages.  Possible extension of the term of the loan and including missed payments into the loan for repayment.

Advertisements

Leave a comment

Filed under Mortgages, Real Estate

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s