The plan worked out with private lenders would allow some borrowers with interest rates that are slated to rise sharply in the coming months to either refinance the loan or have their current rate frozen for five years.
"The holidays are fast approaching and unfortunately this will be a time of anxiety for Americans worried about their mortgages and their homes," Bush said after a White House meeting with members of the group that hammered out the plan.
"There's no perfect solution and the homeowners deserve our help," Bush said. He also urged Congress to pass legislation to reform the tax code to help homeowners refinance their mortgages.
An estimated 1.8 million homeowners took out loans with low teaser rates but now face expensive loan rate resets next year alone, the Federal Reserve has said. The White House says the new plan could potentially help about 1.2 million homeowners.
How This Helps:
Some borrowers who took out loans with subprime interest rates between January 1, 2005 and July 2007 would be eligible for a five-year rate freeze if they face a rate reset over the next 2-1/2 years.
Borrowers would be eligible if they can show that they are a reasonable credit risk, could not afford their homes with higher rates and live in their homes, an effort to weed out investors who took speculative risks.
Bush said the rest of the economy was performing well and could weather the housing storm.
"One reason for confidence is that the downturn in housing comes against the backdrop of solid fundamentals in other areas, including low inflation, a healthy job market, record high exports," Bush said.
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