The US on Tuesday announced new measures to ease the mortgage market crisis that has threatened the wider US and global economy, offering a streamlined approach to help struggling homeowners refinance into affordable mortgages.
Mortgage holders in danger of foreclosure can take
advantage of a government plan that will offer them lower interest rates, a longer term and even deferment of payments if needed.
"Regrettably, there are many American families in this situation," said James Lockhart, director of the Federal Housing Finance Agency, a new regulator created in July to help stem the record flood of mortgage defaults in the United States.
Foreclosures are up 150 per cent and more than 3 million homeowners have faced foreclosure since 2006, sending shockwaves through the US financial system as banks were forced to write down billions of dollars worth of mortgage-backed securities.
The downturn in the US housing market provided the spark for the global credit crisis and severely curbed banks' ability to offer new loans.
The US Congress last month adopted a $700-billion rescue package for the financial industry that some criticized as not offering enough help for struggling homeowners at the centre of the crisis.
"Stabilizing our financial system will require not only strengthening our financial institutions so they are able to lend to our communities, but also helping homeowners avoid preventable foreclosures," said Neel Kashkari, the Treasury official charged with managing the $700-billion bail-out.