| Savings and loan crisis cost taxpayers too much
Economic bubbles that burst get government bailouts. That's historically the way it's worked. The need to stabilize the farm banking system was given as the reason for the mid-80's farm aid. The savings and loan crisis cost taxpayers far more than deposit insurance could cover. Today, it's the Adjustable Rate Home Mortgage bubble that has burst and the Bush administration is attempting to cushion the blow with a plan to help borrowers refinance. 1.8 million ARMs reset to higher rates this year. The Bush administration worries that as many as 1.2 million of these are at risk of foreclosure without help. As was the case with the 1980's farm crisis, the government's plan doesn't bail out banks directly. The mortgage industry will lose $150-400 billion as a result of subprime mortgage losses.
Housing officials: Expect more foreclosures
The only decrease in Milford-area towns was in Millville where foreclosures went down from 4 in 2006 to 2 in 2007. Rosengren said the recent foreclosures stemmed in part from interest rate spikes after two- to three-year lower introductory rates expired. Rosengren said lenders, market analysts and borrowers alike expected borrowers would sell their properties or refinance their mortgages before interest rates went up. But when the housing market took a turn for the worse, borrowers were stuck with the mortgages, and higher payments. Rosengren gave his speech shortly before U.S. Treasury Secretary Henry Paulson announced he was finalizing a deal with lenders to extend the introductory rates. Paulson said it would be a pragmatic response to the worst housing slump in more than two decades, according to The Associated Press.
Considering Refinancing? Look Beyond Rates
With interest rates dropping after the Fed's 0.75-point cut last week, more homeowners are considering refinancing their mortgages to lock in the lower rates. Refinance applications have risen 92 percent since the beginning of November, according to the Mortgage Bankers Association. .
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