Mortgage Rate Freeze?

With the sub-prime mortgage melt down threatening a larger credit crisis, the Federal Reserve is searching for ideas to lessen the blow to the economy.

One idea being floated is to freeze the teaser rates on the “2 and 28 mortgage loans and extend the initial low rate for 5 to 7 years - discussed in billpayersguide.com, Chapter 4.8.

No doubt there will be many forces resisting this move, not the least of which are the lenders holding the bag on some of these loans that were obtained by no-doc applications. The freeze may require ignoring the underlying mortgage fraud issue.

The problem is huge: “Estimates of mortgage resets vary. Federal Reserve officials estimate that 2 million mortgages face resets and as many as 500,000 of these could lose their homes” (from Reuters News service)