Although the US Treasury has reported that more than 45,000 home owners received remortgages in an effort to help them get out of the subprime housing crisis, experts are warning that these home owners will see only short term benefits. In fact, many may end up with higher rates in the long run, particularly if they got a remortgage with an ARM. Sheila Blair the chairman of the Federal Deposit Insurance Corp stated that these remortgage plans “may be unsustainable for borrowers and lead to later delinquencies and contribute to ongoing borrower distress. It is critical that borrowers have loans they can afford over the long term.”"A mortgage servicer’s obligation is to get the maximum value to the investor over the life of the loan,” he said. “If you are going to modify the loan and keep the borrower in the house, the bias is to do that for a shorter rather than longer period of time. . . . There’s a reluctance to do long-term modifications,” Said Bill Longbrake, a senior policy adviser for the Financial Services Roundtable lobbying group and vice chairman of Washington Mutual. Treasury Secretary Henry Paulson Jr, also noted that subprime home owners have benefited greatly from remortgage plans. He said, “The biggest news is the interest rate reductions. These borrowers aren’t going to need to make any changes in their mortgages to keep their homes.”
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