National Officials Near Deal On Mortgage Crisis

In one of my past ad submissions , I addressed the solutions that state officials and major California mortgage lenders are trying to hammer out in order to resolve the mortgage crisis in California.  This week, according to an AP article, Treasury Secretary Henry Paulson said Monday he is confident there will soon be an agreement to help thousands of homeowners avoid mortgage defaults by temporarily freezing their interest rates.

Paulson told a national housing conference that this effort involved a "pragmatic response" to current realities as the economy goes through the worst housing slump in more than two decades. The number of homeowners struggling to meet higher payments because their initial introductory rates are resetting is currently soaring and is expected to go even higher next year.

Paulson and other top Treasury officials have been holding talks with major players in the mortgage industry over the past several weeks to hammer out an agreement that would freeze the lower introductory rates to keep them from resetting to higher levels for a period of years.

As in the state talks between Governor Arnold Schwarzenegger and major mortgage lenders, one of the outstanding issues or sticking points is how long the freeze will last. Some government regulators are pushing for five to seven years but investors, who will see lower payments on the loans, are arguing for a shorter period of one to two years.

An estimated 2 million subprime mortgages, loans offered to borrowers with spotty credit histories, are scheduled to reset to much higher levels by the end of 2008. Those resets will push the payment on a typical mortgage up by $350 per month, taking it from $1,200 currently to $1,550.

Paulson said he believed the disagreements can be resolved without delay. Some expect the administration to unveil the completed deal later this week, but Paulson was not as specific in his remarks, saying only, "I am confident they will finalize these standards soon."

This is the $64,000 question, in my opinion. how long will this freezing period last?