What does the President plan to do to fight problems with mortgages and foreclosure?

He has made a series of proposals to alter the Federal House Administration policy. He wants to make refinancing easier by allowing more people to refinance with FHA insurance, which is a federal assistance mortgage loan that allows those with low income to borrow money for home purchasing. This refinancing would greatly help those who had problems paying their mortgages due to high ARM rates. ARMs´, adjustable rate mortgage loans, are loans where the interest is periodically adjusted based on an index. Borrower payments may rise or fall based on the interest rate, and of course the higher the rate, the higher the payment, which equals mortgage problems and fear of foreclosure. Before, those with adjusted, changing loan rates, couldn’t refinance thru FHA. Refinancing lets the borrow start again, with better odds for successful repayment and less debt. 

Bush’s idea to combat the problems the mortgage holders face was not money grant issuance, as some had hoped, but instead an initiative to avoid foreclosure: i.e. refinancing, financial consoling, etc. Many feel these changes should also include lower cash down payments, limits on loan amounts, restructure of prepayment penalties, risk based pricing, and halting the consideration of mortgage debt as income use. 

Democrats feel the answer is to allow corporations like Fannie Mae and Freddie Mac to be able to buy larger loans from lenders, allowing lenders to more easily loan.  The current cap for Freddie and Fannie loans is set at 417K. However, the White House and Federal Reserve as is, are against this as they foresee this causing further financial difficulties to those large corporations.