The Morning Brief: How Bush Would Help Beleaguered Homeowners
The Wall Street Journal Online</br></br>The Morning Brief, a look at the day's biggest news, is emailed to subscribers by 7 a.m. every business day. Sign up for the e-mail here.</br></br>Low-income borrowers on the brink of losing their homes are said to be the main target of plans President Bush will outline today, in his administration's first policy response to the wave of defaulting mortgages that has reverberated through the global finance system and so shaken the markets.</br></br>Ahead of this morning's speech, administration officials offered to news media a glance of what he will propose: an expansion of the Federal Housing Administration's loan-insurance program to include borrowers who have missed payments but could still be helped by refinancing; a higher limit on FHA insurance premiums, which could let the agency increase the number of high-risk loans it insures; and a suspension of taxes on mortgage debt that lenders forgive, which could help people who still live in their homes and hope to avoid foreclosure by lowering their loan balance and payments. But the Los Angeles Times says it's unclear how much the program will help many struggling homeowners in high-priced markets like California and New York, where "many people who took out adjustable-rate loans in recent years at low 'teaser' rates and now face sharp jumps in their payments may be unable to afford any new market-rate loan, even with government insurance."</br></br>Administration officials said the FHA estimates the expansion of its default-insurance program can help another 80,000 homeowners qualify for refinancing next year -- raising the total number of its refinancing guarantees to 240,000 -- The Wall Street Journal reports. But the FHA's limits on loan size and borrower criteria mean the changes will only help a small portion of homeowners, the Journal adds. And more than two million loans are expected to adjust to higher rates over the next two years. Beyond the rule changes, the Treasury and Housing and Urban Development departments plan to work with lenders and other players in the industry to get less stringent loan products to people in danger of defaulting. And the New York Times cites an official saying there will also be a "jawboning of lenders to persuade them not to foreclose on some borrowers."