As the subprime mortgage crisis worsens, civil rights organizations and Democratic presidential contenders alike are calling for a moratorium on foreclosures, but the mortgage industry is resisting.
"As interest rates have climbed and the housing market has slumped, the number of what are politely called 'delinquent' loans has soared. And as home repossessions grow, civil rights groups and presidential contenders alike are stepping into the row over the high risk, or subprime, mortgage market."
"In the most sweeping call yet, a coalition of civil rights organizations have demanded a six-month moratorium on foreclosures. They want lenders - whose reckless and sometimes predatory policies are largely blamed for the crisis - to help victims refinance their mortgages, or face law suits."
"But the industry is resisting the moratorium, calling it an 'over-reaction' to the difficulties of the market.
"The problems of the subprime market have sent shudders through financial markets, amid fears they could spill over into the broader economy. On Monday, New Century Financial, one of the largest US subprime operators, filed for bankruptcy protection."
"The subprime market is huge, involving loans worth a total $1.3 trillion. But although one in six subprime borrowers are at least two months behind on their payments, the majority are not. Moreover, the rate of overall homeownership has jumped from 64 per cent to 69 per cent in little more than a decade, largely thanks to the subprime market which helps people not previously eligible for loans to obtain them."