Report: lenders agree to five-year freeze on ARM loans

Official announcement expected Thursday
Inman News
A coalition of lenders, loan servicers and investors have reportedly agreed to a plan that would freeze interest rates on some subprime mortgage loans for five years.

Borrowers with loans made between Jan. 1, 2005, through July 30 of this year who face interest rate resets between Jan. 1, 2008, and July 31, 2010, would be eligible for interest rate freeze, the Associated Press reported, citing unnamed sources including Congressional aides.

An official announcement of the plan's details is scheduled for Thursday, AP reported.

Treasury Secretary Henry Paulson said Monday the plan would help homeowners who are current on their payments but cannot afford a higher adjusted rate (see Inman News story).

Debate over the plan has centered around the length of any interest rate freeze, AP reported, with federal regulators pushing for a seven-year freeze, and the industry holding out for a one- to two-year reprieve.