Another rate cut would aid home owners [View All]

[CGowen]

10:00 PM PST on Monday, January 28, 2008

By JACK KATZANEK
The Press-Enterprise

The escape hatch for homeowners worried about losing their homes to foreclosure could open wider if the Federal Reserve votes today or Wednesday to further lower its key interest rate.

The nation's top economic policy makers ordered a surprise cut of three-quarters of a percentage point last week after an emergency meeting. Experts expect the Fed's governors, trying to alleviate the possibility the nation is falling into a recession, to lower the rate by as much as a half-point at this week's meeting.

If the federal funds rate falls another 0.50 percentage points it would lower banks' prime lending rate to 6 percent, cutting the rates for millions of borrowers, including some credit card holders and people seeking home equity lines of credit.


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"For the Inland Empire, anything that makes mortgage costs go down makes it easier to refinance out of mortgages that are causing problems," Husing said. "The primary difficulty facing our economy is mortgages people can't afford."

There were more than 17,000 notices of default -- usually the first step toward foreclosure proceedings -- sent to Inland Southern California homeowners in the fourth quarter of 2007, according to DataQuick Information Systems.

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http://www.pe.com/business/realestate/stories/PE_Biz_D_fed29.228131f.html
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It still sounds like everything would be fine with the economy if those people could pay their mortgages. Nobody is talking about the fact that selling them to everybody was a money making scheme and a way to keep the economy on life support for a bit longer.