WASHINGTON – The Bush administration assured Congress on Friday that it is aggressively working to deal with a rising tide of mortgage foreclosures in the country.
Officials, however, said homeowners threatened with the loss of their homes must do their part by actively seeking help to avert foreclosures.
Robert K. Steel, Treasury's undersecretary for domestic finance, and Brian D. Montgomery, an assistant secretary at the Department of Housing and Urban Development, said the administration has a comprehensive plan and is working with an industry group formed to deal with the looming foreclosure crisis.
Many Democrats have been highly critical of the administration's efforts, contending that they are too dependent on the industry and offer too little in terms of government assistance to stem what could be an estimated 2 million home foreclosures in the coming two years.
But Steel argued that the administration is working through a new initiative at the Federal Housing Administration to offer FHA-insured loans to borrowers in danger of default and also through HOPE NOW, an industry alliance.
"Under the president's leadership, the administration is working diligently to help mitigate the impact of rising foreclosures on homeowners and the economy," Steel said in his prepared testimony.
Montgomery told the committee that the FHA program is available for homeowners to help them "weather personal financial crises and reinstate delinquent loans."
While the government reported Wednesday that the overall economy surged ahead at an annual rate of 3.9 percent in the July-September quarter, economists believe that the steepest downturn in housing in more than two decades, which has Wall Street worried because of lingering credit problems, will cut economic growth by half in the current quarter, raising concerns about a possible recession.
Estimates are that mortgage defaults could rise to 2 million or more in the coming two years in the subprime mortgage market, loans provided to borrowers with weak credit histories. Those loans are now resetting from low introductory rates to much higher rates which can add as much as $250 to $300 to the typical monthly mortgage payment.