|
|
|
|
|
|
| |
| |
By Category |
 |
|
|
| |
|
| |
| |
India On Media |
|
|
|
| |
|
| |
|
|
| Others
News |
|
| Bush to announce sub-prime plan |
| US President George W. Bush is expected to set out plans later on Friday to help homeowners with sub-prime mortgages avoid defaulting.
|
| UNITED STATES OF AMERICA
, 31-August-2007
3:19:45 AM |
| Sub-prime mortgages are higher risk loans offered to people with poor credit ratings or on low incomes.
Rising numbers of defaults on such loans have hit banks, which have bought debt that include these loans.
President Bush is also expected to discuss ways to prevent such a crisis happening again in the future.
He is likely to allow the government-backed mortgage insurer - the Federal Housing Administration - to guarantee loans for borrowers who are more than 90 days behind with their payments, according to the Wall Street Journal.
He is also expected to highlight the need for strong enforcement of laws that prevent irresponsible lending.
Democrats claim the Bush administration has failed to make sure regulators oblige lenders to properly check whether borrowers will be able to repay their loans.
Record defaults
The crisis in the US sub-prime mortgage sector has been caused by American mortgage rates rising sharply over the past year.
This has meant a growing number of sub-prime borrowers have been unable to meet their monthly payments as their initial low rates expire, leading to record levels of defaults.
The result has not only been significant financial difficulty for banks and investment firms heavily exposed to the sub-prime market, but also the recent stock market turmoil.
This is because of fears that the crunch in the sub-prime sector will spread to the wider loans market as banks become far more cautious about who they lend to.
The situation has been exacerbated by the fact that sub-prime debt is often resold as part of a wider debt package, meaning that banks and investors are, as yet, unsure about how far and wide the sub-prime downturn could spread.
|
|
|
|
|
|
|
|
ADVERTISEMENTS
Free offer!!! Become an administrator for your zip home page, "Post" local news (local to your postcode)& pictures, "Post" advertisement banners from local companies. Make Extra money.
|
 |
 |
|
|
| |
|
