Subprime Loan Borrowers May Get Some Relief
In a major initiative to preserve the best interests of subprime loan borrowers, a number of major players involved in home mortgage market have agreed upon a mutual approach towards borrowers of high risk loans. Announcing this in a press conference, Sen. Christopher Dodd, D-Conn, who is the chairman of Senate Banking Committee, had said that such voluntary actions from mortgage lenders is necessary in order to help the government in solving the ongoing crisis that has severely affected the home loan market.
The major players who participated in the meeting and conveyed their consent include JP Morgan Chase & Co, Mortgage Bankers Association, Citigroup Inc, HSBC Holdings Corp, Bear Sterns & Co, Freddie Mac, Fannie Mae, AARP and the Leadership Conference on Civil Rights. The agreement consists of a set of principles that are required to bail out troubled borrowers who are at risk of losing their homes due to foreclosure.
Some of these principles include providing counseling to the borrowers; trying to work out an alternate solution so that the borrowers do not have any difficulties in paying their debts; making the loans more affordable by reducing rates; and restructuring and refinancing loans at a lower interest rate to all eligible borrowers. According to Dodd, all mortgage companies who have agreed on these principles are committed to find a solution for the existing problem. However, there are quite a few companies who have not sent their consent over these principles. These include Countrywide Financial Corp. and Wells Fargo & Co.
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