Bush: No Bailout for Pinched Homeowners
By JEANNINE AVERSA
Associated Press
August 10, 2007
Page 2 of 2
Worries that problems in the housing and mortgage markets will spread, sent stocks tumbling on Thursday. The Dow Jones industrials closed down 387.18 points.
Bush said that he does support financial institutions working with distressed homeowners. He also suggested that some people may not have fully understood the terms of their mortgages. The government, he said, can help out by educating prospective home buyers.
Analysts estimate that nearly 2 million adjustable-rate mortgages will reset to higher rates this year and next. Some higher-risk ''subprime'' borrowers were lured by initially low ''teaser'' rates offered during the housing boom. But those teaser rates can spike upward after the first few years, causing payment shocks.
Loose lending standards, including allowing borrowers to get mortgages with little documentation, contributed to the problems. Federal regulators have taken some steps to address problems, and Congress is also looking into possible action.
Some Democrats like the idea of easing investment limits on mortgage giants Fannie Mae and Freddie Mac to bolster the distressed mortgage market.
Bush wasn't warm to the idea.
''Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options,'' he said.
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