President George W. Bush has reached an agreement with mortgage companies to freeze some sub-prime mortgage rates for the next few years, in an effort to stop a wave of mortgage foreclosures, according to published reports.
Under the agreement, mortgage companies would freeze introductory "teaser" rates on subprime mortgages, preventing them from resetting to higher rates in five years as long as the borrowers did not miss any payments at the lower rate, according to an Associated Press report.
President Bush, who is set to announce the agreement after meeting with industry leaders at the White House today, stressed that the deal is not a bailout because no government money is involved, the report stated.
The agreement would help "potentially a little more than a million" people who can afford payments with their introductory rates, but not if they jump to higher rates, said White House deputy press secretary Tony Fratto.
Marc Lackritz, president of the Securities Industry and Financial Markets Association, said that the organization commends "the use of all options available to borrowers, including refinancing, loan modification, borrower counseling and loss mitigation strategies."
"We strongly support initiatives to prevent foreclosures and preserve home ownership wherever possible," he said in the statement.
Meanwhile, Democratic presidential candidate Sen. Hillary Clinton, D-N.Y., said that
"Wall Street helped create the foreclosure crisis, and Wall Street needs to help us solve it," according to a Bloomberg report.