Lenders Freeze Calif. Subprime Interest Rates
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21 November 2007, 3:31pm ET
(RTTNews) – To help thousands of Californians avoid foreclosure, four major subprime lenders promised to freeze interest rates, under an agreement reached by the lenders and Governor Arnold Schwarzenegger.
“To lose your home, as probably everyone knows, through a foreclosure is an emotional crash, and it sometimes takes years to recuperate from,” Schwarzenegger said. “But we don’t have to sit idly by to watch the American dream become the American nightmare.”
The home lenders — Countrywide, GMAC, Litton and HomeEq — have agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher.
To qualify for the voluntary program, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.
Mentioned Last Change
INDU 13422.93 111.20dollars or (0.83%)
GM 29.34 0.56dollars or (1.94%)
“The idea that the Governor’s Office is committing to getting larger servicers to commit to loan modifications for people facing resets is important and will result in a number of people being helped,” Kevin Stein, associate director of the California Reinvestment Coalition, was quoted by the Sacramento Bee as saying.
“We’ve been in like a desert of despair. There’s not been any good news, and it had not appeared the state was taking sufficient steps to intervene,” Stein said. “This seems to be a significant step.”
“With this type of cooperation from loan servicers, we can save tens of thousands of people from being added to the foreclosure lists,” Schwarzenegger said. “This common-sense approach does not involve a government subsidy or bailout.”
It was unclear for how long the lenders would freeze the interest rates.
Under the arrangement, lenders agree to contact borrowers before their rates adjust and establish a process for handling loan modifications. They will also provide data on the loans they service so the state can track their changes.
THIS WILL ONLY DELAY THE CRASH BUT THE TIDE IS RISING!!!!
