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Interest Freeze Won't Help Houston

By
Real Estate Agent with Coldwell Banker United, Realtor

According to the Houston Chronicle December 11, 2007, article written by Nancy Sarnoff, the White House plan for a five year freeze on some subprime mortgages interest rates will have little effect in Houston.  According to the article, the initiative is aimed at troubled markets like California, Nevada and Florida where home prices soared and have started to fall, making it harder for owners to sell their homes or refinance.  According to David Zugheri, president of First Houston Mortgage, this plan is not designed to help us here in Houston or Texas.  The reason is that because our market has remained relatively stable, many homeowners in the Houston area may have enough value in their homes to either refinance or sell to avoid foreclosure - unlike the more trouble markets.  The governments plan calls for freezing interest rates for subprime borrowers with adjustable rate mortgages before their teaser rates increase and the homeowner becomes at risk for defaulting or losing their homes to foreclosure. The plan would apply to those ARMS schedule to reset between January '08 and July '10.

According to economist Barton Smith, an estimated 37,000 ARMs in Houston will reset by year's end and an additional 50,000 in 2008.

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