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Bush Unveils Plan to Help Mortgage Crisis

By MARTIN CRUTSINGER,

Posted: 2007-12-06 16:08:53

WASHINGTON (Dec. 6) - Hundreds of thousands of strapped homeowners could get some relief from a plan negotiated by the Bush administration to freeze interest rates on subprime mortgages that are scheduled to rise in the coming months.

"There is no perfect solution," President Bush said Thursday as he announced an agreement hammered out with the mortgage industry. "The homeowners deserve our help. The steps I've outlined today are a sensible response to a serious challenge."

Charles Dharapak, AP

President Bush, flanked by Treasury Secretary Henry Paulson, right, and Housing and Urban Development Secretary Alphonso Jackson, left, announces his plan to freeze interest rates Thursday at the White House.

Bush has been accused of moving too slowly to address a crisis that has spread to the broader financial market. But he also was careful not to sound as if he were imposing a government solution and violating his free-market principles. He billed his plan as a voluntary, private-sector arrangement that involves no government money.

"We should not bail out lenders, real estate speculators or those made the reckless decision to buy a home they knew they could never afford," Bush said after meeting with industry leaders at the White House. "But there are some responsible homeowners who could avoid foreclosure with some assistance."

Bush said 1.2 million people could be eligible for help. But only a fraction will be subject to the rate freeze. Others would get assistance in refinancing with their lenders and moving into loans secured by the Federal Housing Administration, Bush said.

Also, the aid will only come to those who ask for it, he said. Thousands of borrowers who are falling behind on their payments have been sent letters about the options, and Bush also urged people to call a new hot line: 1-888-995-HOPE.

Real Estate Troubles

WASHINGTON - JULY 27: (AFP OUT) President George W. Bush arrives at the White House after a bicycle ride July 27, 2008 in Washington, DC. President Bush has said he will sign a mortgage relief bill, allowing homeowners to refinance with government-backed loans rather than foreclosing, that the Senate approved yesterday in a rare Saturday session. (Photo by Dennis Brack-Pool/Getty Images)

Getty Images

ALTADENA, CA - JULY 25: (FILE PHOTO)A foreclosed home is up for sale July 25, 2008 in Altadena, California. During a weekend session of the Senate congress passed aon July 26, 2008 in Washington, DC. During a weekend session of the Senate congress passed legislation to aid failing mortgage companies Fannie Mae and Freddie Mac that would allow homeowners to escape foreclosure by getting the chance to refinance into more affordable loans backed by the Federal Housing Administration on July 26, 2008 in Washington, DC. The $3.9 billion bill would aid neighborhoods devastated by the housing crisis buy and fix up foreclosed properties, helping an estimated 400,000 homeowners. (Photo by David McNew/Getty Images)

Getty Images

STOCKTON, CA - APRIL 29: (FILE PHOTO)An abandoned home stands behind a padlocked gate April 29, 2008 in Stockton, California During a weekend session of the Senate congress passed legislation to aid failing mortgage companies Fannie Mae and Freddie Mac that would allow homeowners to escape foreclosure by getting the chance to refinance into more affordable loans backed by the Federal Housing Administration on July 26, 2008 in Washington, DC. The $3.9 billion bill would aid neighborhoods devastated by the housing crisis buy and fix up foreclosed properties, helping an estimated 400,000 homeowners.(Photo by Justin Sullivan/Getty Images)

Getty Images

STOCKTON, CA - APRIL 29: (FILE PHOTO) A foreclosure sign sits in front of a home for sale April 29, 2008 in Stockton, California. During a weekend session of the Senate congress passed legislation to aid failing mortgage companies Fannie Mae and Freddie Mac that would allow homeowners to escape foreclosure by getting the chance to refinance into more affordable loans backed by the Federal Housing Administration on July 26, 2008 in Washington, DC. The $3.9 billion bill would aid neighborhoods devastated by the housing crisis buy and fix up foreclosed properties, helping an estimated 400,000 homeowners. (Photo by Justin Sullivan/Getty Images)

Getty Images

A worker installs air conditioners at a new office building construction site in Jakarta July 23, 2008. While global investors shirk at anything property-related after the U.S. subprime mortgage meltdown, Indonesian developers are possibly Asia's best kept secret, because brisk home sales contradict share prices that reflect a market crash. Picture taken July 23, 2008. REUTERS/Beawiharta (INDONESIA)

Reuters

Labourers work at an apartment construction site in Jakarta July 21, 2008. While global investors shirk at anything property-related after the U.S. subprime mortgage meltdown, Indonesian developers are possibly Asia's best kept secret, because brisk home sales contradict share prices that reflect a market crash. Picture taken July 21, 2008...REUTERS/Crack Palinggi (INDONESIA)

Reuters

A labourer drills holes at an apartment construction site in Jakarta July 21, 2008. While global investors shirk at anything property-related after the U.S. subprime mortgage meltdown, Indonesian developers are possibly Asia's best kept secret, because brisk home sales contradict share prices that reflect a market crash. Picture taken July 21, 2008...REUTERS/Crack Palinggi (INDONESIA)

Reuters

A labourer works at an apartment construction site in Jakarta July 21, 2008. While global investors shirk at anything property-related after the U.S. subprime mortgage meltdown, Indonesian developers are possibly Asia's best kept secret, because brisk home sales contradict share prices that reflect a market crash. Picture taken July 21, 2008...REUTERS/Crack Palinggi (INDONESIA)

Reuters