United States mortgage lenders and regulators are close to finalizing an aid plan for homeowners hit by the credit crunch, US Treasury Secretary Henry Paulson said on Monday during a housing conference in Washington.
Hundreds of thousands of sub-prime mortgage holders could default and lose homes, as credit tightens in the US. "We are working aggressively and quickly... to help financially responsible but struggling homeowners," Treasury Secretary Henry Paulson said. Last week Mr Paulson met regulators and mortgage executives to discuss options. "We are determined to bring this diverse group together, to develop a set of standards that will be implemented across the industry, from the largest mortgage servicers to the smaller speciality servicers" underlined Mr Paulson. He said that he was confident these standards would be finalised soon. "I am optimistic that we're going to have something to announce before the end of the week," Mr Paulson later told Bloomberg Television in an interview. Many homeowners that signed up to cheap deals are now seeing rates rise. Many believe these mortgage rates should be temporarily frozen, to make it easier for those caught out by the credit crunch to meet their mortgage payments and keep their homes. It is not yet clear how long the rates freeze will last for and which mortgage holders would be eligible under any new scheme. Speaking in Washington, Mr Paulson reiterated that "the housing market downturn is the biggest challenge to our economy". One possible indication of the jitters being felt was seen in data showing that growth in US factory activity slipped in November, as the slowdown in the housing market and tough credit conditions made became felt on the factory floor. The Institute for Supply Management (ISM) index of national factory activity edged down for the fifth straight month, to 50.8 from 50.9 in October. This was slightly stronger than expected and analysts say the manufacturing sector remains resilient. "The news coming out of the financial sector is all gloom and doom but manufacturing is holding its own pretty well," said Norbert Ore, chairman of the ISM manufacturing business survey committee in Atlanta, Georgia. "Manufacturing is at a fairly high level. Supply and demand is strong in most sectors. But we're kind of plateauing there" said Mr Ore.