The Subprime Mortgage Bailout

The federal government and lenders have come to an agreement on a bailout plan for subprime mortgage borrowers. Simply put, the fear of massive foreclosures occurring when teaser rates on subprime loans reset this year has been put off for five years. So, what are the details? If you live in a home and have a subprime mortgage issued between January 1, 2006 and July 31, 2007, and have interest rates that will reset between January 1, 2008, and July 31, 2010, you qualify. Under the bailout plan, those rates will not reset. Instead, they will remain at the current rate for a period of five years. Facing massive foreclosures, the federal government and lenders basically agreed to buy subprime lenders more time.