Industry NewsMortgage

Paulson says servicers, interest rates helping ARM borrowers

Administration digs in heels against bailout

Cuts in short-term interest rates have reduced the payment shock of adjustable-rate mortgage resets, and although foreclosure starts continued to grow in January, loan servicers increased the number of loan modifications at a faster pace. That was the word from Treasury Secretary Henry Paulson on Monday, as he restated the Bush administration's arguments against a government bailout of mortgage lenders before the National Association of Business Economists. Paulson said loan servicers participating in the administration's voluntary HOPE NOW initiative engaged in 167,000 loan workouts in January, up 11 percent from December. Loan modifications increased 19 percent from the previous month, compared with a 5 percent increase in foreclosure starts, Paulson said. All HOPE NOW loan servicers have now implemented standards developed by the American Securitization Forum for streamlining loan workouts, compared with about half at the end of January, Paulson said. But 80 percent of ...