Bush Freezes ARMs and offers Hope Now?

     President George W. Bush has heard the cries of the people and has responded. No, it's not for the control of weapons build up or world peace. It's hope as in "I hope the mortgage companies will listen and not raise ARMs rates". This does not deserve the attention it's getting. Since it's voluntary and highly restrictive and many have no hope at all from the restrictions that are placed on who qualifies.

     Since rates are getting lowered by the fed anyway this will be a non issue for most ARMs. Many people have more hope if they just talk to a local lender and get refinanced now that the Fed has lowered and continues to lower rates. Many mortgage companies will be forced to refinance these customers or lose them to others anyway. It's almost in the cards for lower rates anyway but our Dollar's buying power will suffer in the global markets. Lower interest rates make international investors stay out of dollar based investments. Our best USA export might be real estate next year so the lower prices and lower dollar could help turn the market around. International real estate customers are already contacting me. If the market does not bottom out soon or start to rise then they are for the most going to stay on the sidelines. Nobody want's to take a ride on the falling value of the dollar so we can't just keep lowering interest rates forever.

    I don't think mortgage companies want more REOs so they will do what they can do to stop this. Having prepayment penalties in place does keep people captive with their current mortgages. So the companies that gave people low teaser rates now have captive customers who can't refinance without paying the prepayment penalties. It's pay me now and pay me later for these mortgage companies. They knew the higher rates would force people to refinance but what they did not count on was the Fed would also raise rates and accelerate the ARM rates even more and also make it harder for people to qualify for new ARMs or current fixed rate loans. The lower rates are coming and that's the real hope for many.

    The worse cases are people with 100% financed property with Arms in place with prepayment penalties. They have no where to look for hope so President Bushe's plan may be the only option other than throwing the keys to the mortgage companies. They are trapped in a rising mortgage and a property with lowering value. They can't refinance since they have no money to pay a prepayment penalty and equity would make even the current loan more than 100% of value. This dream of home ownership is more like a nightmare for them. Nobody knows what's going to happen in 5 years but if people want to stay in there homes and mortgage companies don't want more REOs then listen to Bush this sounds like a good plan.

    Hey there is a war still going on too! It's the least mortgage companies can do to support the war effort. I would like to see new Fed mortgage programs for VA loans to help any military personal deployed and also when they come home. I hope someone keeps them in mind. It's not like they can go out and get a part time job to pay new higher ARMs rates while they are out dodging bullets.