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KAI RYSSDAL: We begin today where we began 24 hours ago — with the Bush administration and the economy. The president said once again today he is considering “all options” as he thinks about some kind of economic stimulus package. White House staffers say we probably won’t hear any more specifics until the State of the Union speech at the end of the month. But Treasury Secretary Henry Paulson gave a sneak peek today. He said the Bush administration is thinking about expanding a program currently aimed at subprime borrowers. The secretary says homeowners with conventional, or what’re called “prime” mortgages might need help as well. Marketplace’s John Dimsdale reports now from Washington.
JOHN DIMSDALE: So far, the government’s program to deal with the housing crisis — called Hope Now — has focused only on some 1.8 million mortgage holders struggling with subprime adjustable rate loans. The program encourages lenders to either refinance mortgages or freeze the interest rates. But now the administration is considering help for many more homeowners with conventional — or prime — adjustable rate mortgages. For Tom LaMalfa of the mortgage research company Wholesale Access, the Treasury Secretary’s proposal is an ominous sign.
Tom LaMalfa: Secretary Paulson’s suggestion indicates how rattled, how concerned both he and the administration are over the likelihood that the economy is headed into a serious recession. A stem-winder probably like we haven’t had since the early 1980s.
The Treasury Department won’t say how many prime mortgage holders may need help. Currently, just over a million prime-rate borrowers, with both adjustable and fixed mortgages, are 30 days or more behind on their mortgage payments.
Hope Now’s executive director Faith Schwartz, wouldn’t comment on how big the program may ultimately become. But she says the mortgage help is the same, whether its for prime or subprime borrowers.
FAITH SCHWARTZ: If we cover most of the subprime market, some of these practices and principles could in effect help the broader market as well.
Schwartz says any borrowers having trouble making their monthly payments should get in touch with their mortgage provider to try to work out more favorable terms.
In Washington, I’m John Dimsdale for Marketplace.
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