Bush to offer aid to some homeowners

President Bush is expected to announce policy changes and recommendations today designed to help homeowners who were caught in the subprime disaster avoid default on their loans.

The President is expected to allow the Federal Housing Administration to guarantee loans for delinquent borrowers, which will enable those who are at least 90 days behind in payments but still living in their homes avoid foreclosure by refinancing at better interest rates, according to the Wall Street Journal.

Bush is also expected to announce an initiative with the Treasury and Dept. of Housing and Urban Development that will identify borrowers who are in danger of defaulting over the next two years and work with lenders and others to come up with more favorable loan products for these homeowners.

Today's announcements will mark the first time the administration has taken public actions to help curb a fallout from the collapse in subprime lending and the credit crunch that has occured as a result. Bush is also expected to discuss ways to prevent a similar collapse in the future.

Federal Reserve Chairman Ben Bernanke also spoke this morning on whether the central bank will make more short-term rate cuts in an attempt to lower borrowing costs. In his prepared remarks, Bernanke said the Fed "stands ready to take additional actions as needed to provide liquidity and promote the orderly functioning of markets," but he gave no hints that the agency intends to slash rates.

Bernanke also said: "It is not the responsibility of the Federal Reserve--nor would it be appropriate--to protect lenders and investors from the consequences of their financial decisions." But he followed that remark by saying that if the problem spread further the Fed would have to consider that as well.

Read Bernanke's prepared testimony here.

More from the Web:

Bush moves to aid homeowners (Wall Street Journal)
Bush to outline subprime mortgage initiative (Washington Post)
Bush to expand government role to deal with subprime (Bloomberg)

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