Rumors are swirling around Capitol Hill that the Bush administration and representatives from the mortgage industry are feverishly working on a plan that would freeze the interest rate for subprime loans, essentially providing a life raft for more than two million Americans with adjustable mortgages scheduled to reset to a higher rate within the next two years. The Wall Street Journal was the first to report these developing events.
Friday's developments come less than 24 hours after the Bush administration lowered its 2008 economic forecast, partially due to a deteriorating housing market.
Treasury Secretary Henry C. Paulson met with banking regulators and representatives from the mortgage industry on Thursday, and according to Treasury Department spokeswoman Jennifer Zuccarelli, he asked the group to come up with a plan to resolve the subprime crisis.
"We asked them to come up with a systematic approach," Zuccarelli told BUILDER Online, "whatever that might be. We aren't being specific on it-we asked the industry to come up with it."
When asked about a timetable, Zuccarelli said that Paulson has gone on record recently that he wants a plan in place by year's end.
Thursday's meeting was held as part of the Bush administration sanctioned coalition, Hope Now, which was organized in October as a response to the nationwide epidemic of defaults and foreclosures. Representatives from Hope Now did not return a request for comment on this developing matter at press time.
According to a Reuter's report, representatives at the White House on Friday said that it is "premature" to talk about any discussions held this week concerning the mortgage mess at this point.
In Friday's report in the Wall Street Journal, one scenario suggests a seven-year freeze on adjustable-rate mortgages. The Treasury Department is non-committal on revealing any details from Thursday's summit.
"I am not going to confirm the Wall Street story," Zuccarelli said, "but take [from it what you will]."