Subprime Mortgage Plan Assures Recession

RISMEDIA, Dec. 12, 2007-The subprime mortgage rescue plan to help borrowers by President George W. Bush assures that the U.S. economy will fall into a deepening recession in 2008, perhaps even a depression, according to an in-depth analysis conducted by Housing Predictor.

More than 2-million mortgages made to subprime borrowers are due to have their interest rates increased in the next 18 months. The plan will help only an estimated 240,000 of those borrowers, according to Barclays Capital. Barclays determined the figure by extrapolating it from a similar plan approved by mortgage companies and banks in California.

Many subprime borrowers cannot afford the new higher rates and are expected to suffer from foreclosure as a result. The Bush plan would freeze mortgage rates on some loans five years.

Home values are falling as buyers have become uneasy over the nation’s financial future and are nervous about entering the market place or making a move to put their homes on the market to resell. Markets in California, Florida, Massachusetts, Ohio and Indiana have been some of the hardest hit.

Investors on Wall Street are also nervous and financial markets continue to swing as a result of the credit crunch fall out.

The investment and real estate speculative market was at its highest threshold in the nation’s history at the height of the real estate market boom. In addition to more than 2 million homes that will be foreclosed through the end of the year as a result of the subprime problem, an estimated 1.5 million homes, condos and other properties mortgaged by investors are due to have their interest rates reset in the next three years.

Hundreds of thousands of investors who were hoping for assistance from the Bush administration’s proposal will not receive any assistance as more mortgage companies and banks are sued by mortgage buyers for false representations of their mortgages, fraud and improprieties in their dealings with customers.

The crisis has broadly extended into the conventional mortgage market and is expected to take a major toll on the national economy sending it into a major recession at the least, which the Bush administration won’t have to deal with in the future.

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