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| Version 1 | Version 2 |
|---|---|
| Bush to announce sub-prime plan | Bush to announce sub-prime plan |
| (20 minutes later) | |
| US President George W. Bush is expected to set out plans later on Friday to help homeowners with sub-prime mortgages avoid defaulting. | US President George W. Bush is expected to set out plans later on Friday to help homeowners with sub-prime mortgages avoid defaulting. |
| Sub-prime mortgages are higher risk loans offered to people with poor credit ratings or on low incomes. | |
| Rising numbers of defaults on such loans have hit banks, which have bought debt that include these loans. | Rising numbers of defaults on such loans have hit banks, which have bought debt that include these loans. |
| President Bush is also expected to discuss ways to prevent such a crisis happening again in the future. | President Bush is also expected to discuss ways to prevent such a crisis happening again in the future. |
| He is likely to allow the government-backed mortgage insurer - the Federal Housing Administration - to guarantee loans for borrowers who are more than 90 days behind with their payments, according to the Wall Street Journal. | He is likely to allow the government-backed mortgage insurer - the Federal Housing Administration - to guarantee loans for borrowers who are more than 90 days behind with their payments, according to the Wall Street Journal. |
| He is also expected to highlight the need for strong enforcement of laws that prevent irresponsible lending. | He is also expected to highlight the need for strong enforcement of laws that prevent irresponsible lending. |
| Democrats claim the Bush administration has failed to make sure regulators oblige lenders to properly check whether borrowers will be able to repay their loans. | Democrats claim the Bush administration has failed to make sure regulators oblige lenders to properly check whether borrowers will be able to repay their loans. |
| Record defaults | |
| The crisis in the US sub-prime mortgage sector has been caused by American mortgage rates rising sharply over the past year. | |
| Many US sub-prime borrowers may risk losing their homes | |
| This has meant a growing number of sub-prime borrowers have been unable to meet their monthly payments as their initial low rates expire, leading to record levels of defaults. | |
| The result has not only been significant financial difficulty for banks and investment firms heavily exposed to the sub-prime market, but also the recent stock market turmoil. | |
| This is because of fears that the crunch in the sub-prime sector will spread to the wider loans market as banks become far more cautious about who they lend to. | |
| The situation has been exacerbated by the fact that sub-prime debt is often resold as part of a wider debt package, meaning that banks and investors are, as yet, unsure about how far and wide the sub-prime downturn could spread. |