WASHINGTON — A Bush administration-led effort to rescue troubled homeowners said it helped 5 percent of borrowers with subprime loans in the second half of 2007.
A coalition of lenders, investors and nonprofit groups — dubbed Hope Now — was created in October to address soaring mortgage defaults and home foreclosures.
Final results for December aren’t in yet although the Hope Now group said Friday it was on track to have helped 370,000 borrowers with shaky credit in the second half of last year. That works out to 5.2 percent of the 7.1 million outstanding subprime loans.
“It’s going probably as fast as one could reasonably expect given that this crisis has mushroomed so rapidly,” said Bill Longbrake, senior policy adviser to the Financial Services Roundtable, a banking-industry group helping coordinate the response. “These things take a little bit of time to build up.” Foreclosure prevention is a top policy priority in Washington.
More than 1.8 million mortgages made to borrowers with poor credit are scheduled to reset to higher rates this year and next.
Last month, the Bush administration brokered a deal with the mortgage industry to freeze rates on some subprime mortgages for five years to help at-risk homeowners when introductory rates reset to sharply higher levels. Treasury Secretary Henry Paulson said last week the administration is exploring a significant expansion of the program.
Members of Hope Now include Bank of America Corp., Citigroup Inc., Washington Mutual Inc. and Wells Fargo & Co.
The group said Friday that industry efforts ramped up in the fourth quarter. It projected 84,000 subprime loans were modified in the fourth quarter, up from 28,000 in the third quarter.
Of the 950,000 borrowers estimated to be delinquent in the second half of 2007, the group estimated it helped nearly 40 percent.
