NEW YORK, Jan. 7 (UPI) -- About 45,000 U.S. subprime borrowers sought to refinance their mortgages under a plan to prevent foreclosures, the U.S. Treasury secretary said.
Treasury Secretary Henry Paulson said Hope Now, the department-backed alliance with the mortgage industry, has representation of about 90 percent of the firms representing the subprime market. In remarks prepared for delivery in New York, he said the industry will begin to fast-track some qualified borrowers into new, affordable loans.
The Treasury Department said it expects up to 1.8 million subprime mortgages to reset during the next two years, "raising the potential of a market failure," Paulson said.
"Fast-tracking will move some troubled homeowners quickly into refinancings and interest rate freezes, which will free up time for (mortgage) servicers to focus on the more difficult cases," Paulson said.
Paulson warned of challenges ahead, particularly since the volume of subprime mortgage resets will increase in 2008, and most of the loans were originated in 2006 "under the most lax underwriting standards."
"Final success," he said, "will be measured by the number of avoidable foreclosures that are prevented, not by the number of refinancings or modifications with an interest rate freeze."