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White House Plan Assures Recession


The mortgage rescue plan aimed at helping subprime borrowers by the White House 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.

The Fedís one-quarter point rate cut earlier this week failed to appease investors on Wall Street, who increasingly believe the national economy is headed for a recession.

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. Hundreds of thousands of financially strained mortgage borrowers cannot afford new higher interest rates and are expected to suffer from foreclosure as a result. The plan would freeze mortgage rates on some loans five years.

Housing Predictor was the first to forecast that more than 3-million homes will be foreclosed as a result of the subprime crisis through 2009, and has not yet extended itís forecast into future years. The credit crunch has produced the worst housing crisis since the Great Depression, slowing real estate sales in the over-whelming majority of the nation.

The real estate market was at its highest threshold in the nationís history at the height of the real estate 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 plan will not receive assistance as more mortgage companies and banks are sued by mortgage borrowers.

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 at least a major recession, which the Bush administration wonít have to deal with in the future.

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 subprime crisis
 mortgage plan
 real estate
 credit crisis

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