The Federal Reserve To The Rescue
Relief urged for imperiled borrowers
The Federal Reserve and other banking regulators issued special guidance urging loan service companies to work with borrowers in danger of defaulting on their mortgages.
The guidelines are not mandatory, but the regulators expressed hope that companies that collect payments on mortgages would heed the advice.
“More and more consumers with sub-prime and hybrid mortgage products are facing the very real prospect of losing their homes through foreclosure as their payments reset and become unaffordable,” says Sheila Bair, chairwoman of the Federal Deposit Insurance Corp.. “It is vital that mortgage servicers work proactively with borrowers facing much higher payments.” An estimated 2 million adjustable-rate mortgages are scheduled to reset by the end of 2008, going from low introductory interest rates to higher rates.
