SAN FRANCISCO (KCBS) -- The Bush administration is launching a program that will allow homeowners who can't afford their escalating mortgage payments to refinance through the Federal Housing Administration.
While some consumer groups are praising the action, others are warning homeowners to proceed with caution in any bailout effort.
Experts say that many people were caught up in buying property because loans were so easy to get.
”Middle class people were kind of gambling on the housing market, thinking it was an easy way to make money,” said Michael Harrington president of Summit Mortgage Advisor.
Not all victims of high mortgage rates were blindsided. Some were sophisticated investors taking a gamble.
”In the best case, prices rise, they sell the asset and walk away from the mortgage rich,” said Tom Davidoff, assistant professor at the UC Berkley Haas School of Business. “In the worst case, they don’t pay the mortgage and walk away from the asset with very little lost.”
(MGO)
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KCBS' Janice Wright reports
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