This entry was posted on Wednesday, November 21st, 2007 at 1:34 pm and is filed under Legislation, Subprime Meltdown. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Happy Thanksgiving May be Happier for Stressed California Homeowners
As if on cue for Thanksgiving, the Sacramento Bee today announced that governor Arnold Schwarzenegger had obtained agreement from four lenders to freeze rates on California subprime loans that are about to reset. Hey, one more reason to celebrate!
The initial list of lenders include Countrywide, GMAC, Litton, and HomeEq—hopefully more will follow their lead—and the agreement applies to borrowers who a) have not yet defaulted on their payments, b) live in the home, and c) can prove that they will be unable to make their new payments. Rates could be frozen for 5 years or more, depending on the borrower’s situation.
Borrowers should not expect this concession to come without some sacrifice. The article mentions that,
“Lenders have complained at State Senate hearings that some borrowers are loath to give up cell phones and cable TV to help them reach a deal.”
The implication is that lenders will be scrutinizing the home owner’s budget and agreeing to forego the interest rate increase only if the borrower is willing to make concessions as well. That seems fair and reasonable.
I’d like to keep tabs on these lenders to make sure this isn’t just happy talk. If any of you do contact one of these lenders, please come back here and let us know how that conversation went.
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