Washington Mutual has announced that it will help some with subprime mortgages refinance in order to help them save their homes. WaMu is expected to offer as much as $2 billion for refinancing subprime mortgages. The idea is to avoid foreclosure. The Daily Breeze offers a look at why a lender might consider this option:

As housing prices fall in many regions nationwide, Washington Mutual
has an interest in seeing borrowers repay rather than default because
of the declining value of the collateral backing the loans. The Federal
Reserve estimates that it costs a bank $50,000 to foreclose on a home.

Washington Mutual isn’t the only lender rushing in to help those with subprime mortgages. Freddie Mac is also providing relief from subprime mortgages — to the tune of up to $20 billion, reports the Chicago Tribune. The Tribune also reported on some of the reasoning behind the moves to help those caught in subprime mortgages:

It came a day after federal regulators
called on lenders to work with distressed borrowers unable to meet payments on
high-risk mortgages to help them keep their homes.

Possible bailout from Capitol Hill? Housing Doom Housing Bubble blog looks at the possibility here.

Tags: subprime mortgages, personal finance, financial planning, finances,
subprime mortgages refinance, Washintgon Mutual, Freddie Mac, subprime mortgages bailout