South Florida won’t get a big boost from President Bush’s plan to freeze interest rates for homeowners nationwide who are bracing for sharp increases in their adjustable-rate mortgages, analysts say.
What’s more, Bush’s proposal is focused on preventing a national foreclosure crisis and not meant to aid individual states, such as Florida and California, that are leading the housing bust after the boom of 2000-2005.
Some economists say there’s nothing in the president’s proposal that will trigger a rebound in a South Florida housing market that has been mired in a slump for almost two years.
“It’s not going to help areas that need help the most, and Florida certainly is one of those,” said Per Gunnar Bergland, chief economist for Moody’s Economy.com, a Pennsylvania research firm.
Bush said relief is designed for homeowners holding adjustable-rate subprime mortgages they took out between Jan. 1, 2005, and July 31, 2007, and are facing a steep increase in their interest rates before July 31, 2010.
About 1.2 million people could be eligible for help, but only a fraction will get the five-year rate freeze. Others would get assistance in refinancing with their lenders and moving into loans secured by the Federal Housing Administration, Bush said.
Also, the aid will come only to those who ask for it, he said. Thousands of borrowers who are falling behind on their payments have been sent letters about the options, and the president also urged people to call a new hotline: 1-888-995-HOPE.
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