Plan against foreclosures, announced six month ago by California Governor Arnold Schwarzenegger, has limited impact on preventing it.
In the first quarter of 2008 lenders reported modifying about 24,000 subprime loans, almost 11,600 more used temporary relief from payments. Lenders who joined agreement last November, refinanced 10,831 borrowers into new loans.
During the first five months of Schwarzenegger’s plan, 98,925 loans have been reworked.
Main goal of agreement was to freeze interest rates - monthly payments of 500,000 adjustable subprime loans in California would reset within 18 months.
In the five months, rates have fallen, but new monthly payments won’t reset significantly.