Under the administration’s new program, the interest rate on second mortgages will be reduced to 1% on loans where payments cover interest and principal and to 2% for interest-only loans. The government will subsidize the rate reduction, with the money going to the mortgage investor.
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Can’t the servicers lower the rates to 1% (or even 0%!) all by themselves? Why does the govt (that’s us, the taxpayers…again) have to subsidize anything? These are the lenders’ loans, and it’s up to them to modify them however they see fit. They can reduce principal or lower rates without any govt assistance.
Can somebody please explain again WHY we (taxpayers) need to do this?
