Pressure growing to ease subprime crisis
Pressure growing to ease subprime crisis
By Jeremy Grant in Washington
Copyright The Financial Times Limited 2007
Published: August 24 2007 03:33 | Last updated: August 24 2007 03:33
The growing political importance of the subprime mortgage crisis was underscored on Thursday when Chris Dodd, Senate banking committee chairman, called on the Bush administration to speed up efforts that could allow the Federal Housing Administration to help.
The FHA is a 1930s-era agency that is the largest mortgage insurer in the world. The Treasury is already working with the Department of Housing and Urban Development (HUD) on measures that could allow the FHA to help more subprime borrowers with refinancings.
This would help the many borrowers who are in the autumn facing a switch in their payments at low introductory, or “teaser”, rates to more expensive rates.
Mr Dodd has for weeks been urging the administration – without success – to ease problems in the mortgage market by agreeing to lift caps on the mortgage portfolios of Fannie Mae and Freddie Mac, the two big “government-sponsored” lenders, which buy mortgages and package them into securities.
By now urging faster action on FHA reform – an issue that has the administration’s support – Mr Dodd has highlighted how some Democrats appear to be taking as much political advantage of the issue as they can.
Bill Gross, a prominent US fund manager, has also attracted attention by calling on the Bush administration to do more to help struggling borrowers.
In a letter to Henry Paulson, Treasury secretary, and Alphonso Jackson, his counterpart at HUD, Mr Dodd welcomed statements by Mr Paulson that many families caught up in the subprime crisis had been victimised by “bad lending practices”. He said: “I understand that the staff of [the two departments] are discussing ways to use the FHA single-family insurance programme to help borrowers escape these mortgages by refinancing them into more affordable FHA loans. I want to urge you to move expeditiously in this direction by making any administrative changes to the programme that are needed to achieve this worthy goal.”
By contrast, efforts by top Democrats such as Mr Dodd to persuade the Bush administration to allow higher caps on Fannie and Freddie’s mortgage portfolios have so far fallen on deaf ears.
Federal Financial Analytics, a Washington-based consultancy, said it believed it was “looking more and more likely that the administration will give the GSEs some leeway on their portfolios, although not the general increase Fannie has been seeking”.
By Jeremy Grant in Washington
Copyright The Financial Times Limited 2007
Published: August 24 2007 03:33 | Last updated: August 24 2007 03:33
The growing political importance of the subprime mortgage crisis was underscored on Thursday when Chris Dodd, Senate banking committee chairman, called on the Bush administration to speed up efforts that could allow the Federal Housing Administration to help.
The FHA is a 1930s-era agency that is the largest mortgage insurer in the world. The Treasury is already working with the Department of Housing and Urban Development (HUD) on measures that could allow the FHA to help more subprime borrowers with refinancings.
This would help the many borrowers who are in the autumn facing a switch in their payments at low introductory, or “teaser”, rates to more expensive rates.
Mr Dodd has for weeks been urging the administration – without success – to ease problems in the mortgage market by agreeing to lift caps on the mortgage portfolios of Fannie Mae and Freddie Mac, the two big “government-sponsored” lenders, which buy mortgages and package them into securities.
By now urging faster action on FHA reform – an issue that has the administration’s support – Mr Dodd has highlighted how some Democrats appear to be taking as much political advantage of the issue as they can.
Bill Gross, a prominent US fund manager, has also attracted attention by calling on the Bush administration to do more to help struggling borrowers.
In a letter to Henry Paulson, Treasury secretary, and Alphonso Jackson, his counterpart at HUD, Mr Dodd welcomed statements by Mr Paulson that many families caught up in the subprime crisis had been victimised by “bad lending practices”. He said: “I understand that the staff of [the two departments] are discussing ways to use the FHA single-family insurance programme to help borrowers escape these mortgages by refinancing them into more affordable FHA loans. I want to urge you to move expeditiously in this direction by making any administrative changes to the programme that are needed to achieve this worthy goal.”
By contrast, efforts by top Democrats such as Mr Dodd to persuade the Bush administration to allow higher caps on Fannie and Freddie’s mortgage portfolios have so far fallen on deaf ears.
Federal Financial Analytics, a Washington-based consultancy, said it believed it was “looking more and more likely that the administration will give the GSEs some leeway on their portfolios, although not the general increase Fannie has been seeking”.
posted by Carlos T Mock at 2:54 AM
0 Comments:
Post a Comment
<< Home