Foreclosures Keep Rising as Bush Preps Plan

The mortgage foreclosure rate for certain borrowers jumped to a record high in the third quarter as President Bush prepared to unveil later today a plan to help some homeowners pressured by rising interest rates on their mortgages.

The 30-day delinquency rate for all mortgages rose to 5.59 percent, up from 5.12 percent in the second quarter, according to figures from the Mortgage Bankers Association. The foreclosure rate on subprime adjustable rate mortgages rose to 4.72 percent from 3.84 percent in the second quarter. The delinquency rate in this category came in at 18.81 percent in the third quarter, up from 16.95 percent.

Bush’s plan remains unclear though some media have reported select details.

The plan reportedly would freeze the interest rate for borrowers that received an adjustable rate mortgage to its introductory rate.

According to some news reports, Bush’s plan covers only homeowners who received adjustable rate mortgages between Jan. 1, 2005 and July 31, 2007 which are due to reset between January 2008 and July 2010.These borrowers must be current on their payments and be categorized as subprime, typically used to refer to borrowers with troubled credit payment history.

Critics this morning responded to the Bush plan despite the lack of details.

Ted Lieu, the chairman of the banking and finance committee in the California statehouse, said the plan “falls far short” of what is needed to help hard-pressed homeowners.

“Over 2,000 California homeowners receive a foreclosure notice a week, a number set to double next year. Nationwide, 1.4 million homeowners are expected to face foreclosure next year,” Lieu said in a statement. “The Bush plan will do nothing to help.”