Rate Freeze To Cool Mortgage Meltdown
Eric Petroff
In the wake of 2007’s rising foreclosure rates, the U.S. government negotiated with a series of mortgage-service companies– Citigroup, Countrywide Financial, Washington Mutual and Wells Fargo (or the Hope Alliance)–to create a “Mortgage Rate Freeze” program to alleviate the financial strain of resetting interest rates for subrpime borrowers in 2008.
In theory, this program is designed to not only benefit a targeted group of homeowners but the economy as a whole by reducing foreclosures and, therefore, downward pressure on real estate prices. There is a wide range of estimates on the number of people this plan will help, from the 1.2 million estimated by the Mortgage Bankers Association to as few as 145,000 estimated by The Center for Responsible Lending.
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