By David Lawder
WASHINGTON (Reuters) - The Bush administration is cool to the idea of a government bailout for U.S. homeowners facing foreclosure, at least until it is clear whether the private-sector initiatives it champions can work.
Treasury Undersecretary for Domestic Finance Robert Steel told the Reuters Housing Summit on Thursday that the next 30 to 60 days will provide a much better gauge of efforts by the Hope Now alliance of mortgage lenders and servicers to keep troubled borrowers from losing their homes.
Steel said the Treasury wants to hear new ideas to help the staggering U.S. housing market but made clear he is not ready to discuss any additional options until a fuller evaluation of current efforts can be made.
"Right now we're committed to the programs we've presented and our focus is on making those as successful as we can," Steel said. "We've said publicly, and I'll say it again today, we're always interested in new ideas. But I think that the strategies that we're working on are the ones that we think are correct for now, and we'll continue to evaluate other things and see where we go."
He said a suggestion from Democratic Sen. Christopher Dodd of Connecticut that the government consider creating a special fund to buy up distressed mortgages did not seem appropriate to the current economic situation. He noted that the last time such a step was taken was during the Great Depression.
"That was in 1934 that this idea was introduced. The foreclosure rate was at 50 percent and the unemployment rate was at 25 percent. That does not seem to be the right tool for this task, to my mind," Steel said.
The Hope Now alliance was created under Treasury guidance last October, as turmoil in the U.S. housing and credit markets deepened, to coordinate mortgage industry efforts to renegotiate terms on subprime loans facing resets to higher, unaffordable levels.
It has since been modified twice to include a wider range of loans and assistance to help stem a rising tide of foreclosures. A program to automatically freeze some subprime rates at low, initial "teaser" levels started in January, while servicers agreed to stay foreclosures on all seriously delinquent mortgages for 30 days. Continued...
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