November 2007
The AC Phoenix
Pres. Bush’s Mortgage Proposals Fail
to Help Foreclosures
By Martin Crutsinger
AP Economics Writer
WASHINGTON (AP>—
President George W. Bush recently announced a set of modest proposals
to deal with an alarming rise in mortgage defaults that have contributed
to turbulent financial markets over recent weeks.
Housing analysts said it was highly likely the limited steps Bush
outlined August 31 will be expanded in coming weeks by a Democratic-
controlled Congress intent on responding to growing voter anxiety as up
I to 2 million homeowners worry
about losing their homes.
Officials in the troubled housing
industry said the important thing
was that the administration had
finally offered a proposal, a step
they said should help calm global
financial market that have been on
a rollercoaster ride in recent
weeks as investors worried about
a serious credit crunch.
“This is not a cure-all, but it is
good to see something coming out
of the White House,” said David
Seiders, chief economist for the
National Association of Home
Builders. “It is good for markets,
both domestically and internation
ally, to see that the White House
is facing the problem head on and
at least starting to do something
about it.”
Pres. Bush’s comments came the same day that Federal Reserve
Chairman Ben Bemanke pledged to do everything necessary to protect
the economy from the market turmoil. His comments to a Fed confer
ence in Wyoming were seen as a strong signal that the central bank was
moving closer to cutting a key interest rate, possibly as soon as its next
meeting September 18.
“Bemanke basically said that if problems in the financial market
are hurting the economy, then the Fed will have to respond,” said Mark
Zandi, chief economist at Moody’s Economy.com. “All the conditions
are in place for the Fed to begin cutting interest rates.”
The comments from Mr. Bemanke and Pres. Bush bolstered spir
its on Wall Street, where the Dow Jones industrial average finished an
other erratic week with a gain of 119.01 points on Aug. 31, to close at
13,357.74.
Both Mr. Bemanke and Pres. Bush emphasized that their actions
were not aimed at bailing out investors who had made bad decisions.
“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 af
ford,” Pres. Bush said in the Rose Garden. “Yet there are many Ameri
can homeowners who could get through this difficult time with a little
flexibility from their lenders or a little help from their government.”
With Treasury Secretary Henry Paulson at his side. Pres. Bush
insisted the economy was strong and could weather market turbulence.
But he did 'not repeat his forecast of Aug. 8, that the economy was
headed for a “soft-landing” The next day, financial markets went into a
significant swoon, sparked by the announcement by France’s largest
bank that it was halting redemptions in three large investment funds.
That disclosure sent shock waves through the global financial
system because it indicated problems from rising defaults on subprime
mortgages in the United States—mortgages packaged and sold to inves
tors worldwide—were more far-reaching than realized.
Pres. Bush’s proposals unveiled Friday are designed to help com
bat those defaults. They would make it easier for borrowers now holding
adjustable rate mortgages that are resetting to higher monthly payments
to refinance those loans using the resources of the Federal Housing Ad
ministration. The FHA is an agency that helps low and moderate-income
Americans afford homes.
The 80,000 additional people who would qualify for FHA loan
guarantees under the proposed changes Pres. Bush announced would
still be a tiny portion of an estimated 2 million homeowners whose ad
justable rate mortgages (ARM) are scheduled to reset at higher rates by
the end of 2008. Of those 2 million loans that will reset, FHA estimates
that 500,000 could go into foreclosure. The new programs plus current
FHA programs could help about half of those 500,000 loans be refi
nanced officials said.
Pres. Bush’s proposals follow a number of measures already in
troduced in Congress to deal with the mortgage-lending crisis. Many
Democrats said while they welcomed Pres. Bush’s ideas, they felt they
did not go far enough and should be modified to help more people.
“For too long this president has sat on his hands as families were
losing their homes,” said Sen. Christopher Dodd, a Democratic presi
dential candidate and chairman of the Senate Banking Committee.
(If you are a
homeowner struggling
with increasing interest
rates or are about to
reach foreclosure, or if
you want to buy a home
at a fixed, low interest
rate with America’s
Best Mortgage, the
non-profit Neighbor
hood Assistance Asso
ciation of America may
be able to help you, no
matter what your credit
score. For more infor
mation go to
www.naca.com or call
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704-536-7676 today.)
Tops in foreclosures
Foreclosure statistics for tie nation’s 100 lai^st cities fw the 3rd quarter
of 2006:
Metro area
Total*
3rd quarter
2006
per this
mjraberof
hoijs^oids
Percent
diangefram
2iKi qu^er
United States
318.355
363
17%
1
DsutiiVUvonia/Oeabofn
10.316
80
41,9
2
fijrtlaitelate,R8.
8.431
88
86.53
3
Demer/Aurora. Colo.
9,825
90
30,41
4
Miami. Ra.
9.380
91
97.18
5
D^.Tex^
13,422
39
9.94
6
hi^iapdls, y.
6.383
1(M
-2.5
7
FonWonti/Artngwn.Taffls
6.854
101
13.8
8
Sprties/MoMia. Go.
13,562
107
4,51
9
LssV^a^ac^.Nev.
5,215
115
58,85
10
M^nphis.Tm
3,929
144
2.08
29
HSs/Iroy
4,211
231
36.5
•Numfaorof homes in foreclosure
Source: ReeltYTrsc Inc.
TheOetrwt News
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