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WASHINGTON—
This month the Bush administration unveiled a plan that calls on lenders to voluntarily freeze low introductory rates for certain borrowers for as long as five years.
Some people have criticized the plan, saying it may only help about one-third of the nearly 1.8 million homeowners whose loans will adjust to sharply higher rates in the next 2 1/2 years.
But Paulson defended the plan, saying it would help keep the housing slump from nudging the broader economy into recession.
"The biggest risk to the economy right now is the housing slump," he said. "The problem is going to get much worse unless we can do something about it."
An upbeat Schwarzenegger carried a message of hope and help, predicting that California's declining home values would turn around soon.
"This crisis is not going to last," he said. "It's a bump in the road."
Trudy Crawford, who bought a home in Stockton two years ago, was among those attending the town hall session. Crawford said her mortgage payments were going up at a time when a death in the family had already set her back. She told the crowd her lender has been no help.
"Where's the help for us?" Crawford asked. "I'm raising two grandchildren."
The governor replied, "I want to find out why your lender can't help you." The room erupted in applause.
"Stockton was a good spot for the officials to experience the community's pain and frustration," said Paul Leonard, director of the California office of the Center for Responsible Lending, an advocacy group for borrowers. The governor and Paulson, he said, went "right into the belly of the beast."
jonathan.peterson
@latimes.com
marc.lifsher@latimes.com
Peterson reported from Washington and Lifsher from Sacramento.
Some people have criticized the plan, saying it may only help about one-third of the nearly 1.8 million homeowners whose loans will adjust to sharply higher rates in the next 2 1/2 years.
But Paulson defended the plan, saying it would help keep the housing slump from nudging the broader economy into recession.
"The biggest risk to the economy right now is the housing slump," he said. "The problem is going to get much worse unless we can do something about it."
An upbeat Schwarzenegger carried a message of hope and help, predicting that California's declining home values would turn around soon.
"This crisis is not going to last," he said. "It's a bump in the road."
Trudy Crawford, who bought a home in Stockton two years ago, was among those attending the town hall session. Crawford said her mortgage payments were going up at a time when a death in the family had already set her back. She told the crowd her lender has been no help.
"Where's the help for us?" Crawford asked. "I'm raising two grandchildren."
The governor replied, "I want to find out why your lender can't help you." The room erupted in applause.
"Stockton was a good spot for the officials to experience the community's pain and frustration," said Paul Leonard, director of the California office of the Center for Responsible Lending, an advocacy group for borrowers. The governor and Paulson, he said, went "right into the belly of the beast."
jonathan.peterson
@latimes.com
marc.lifsher@latimes.com
Peterson reported from Washington and Lifsher from Sacramento.
