US President George W Bush has announced a package of measures to help US home-owners struggling to pay their mortgages amid the sub-prime loan crisis.
He said the turmoil on financial markets stemming from the problem would take time to play out. But he said the mortgage market worries represented only a small part of the economy and would not undermine what he said were 'sound fundamentals'.
Financial markets around the world have been affected in recent weeks as defaults have risen on so-called sub-prime mortgages to less creditworthy borrowers.
President Bush urged US lenders to work with home-owners to renegotiate their mortgages to prevent default. He called on Congress to approve legislation he proposed last year to modernise the Federal Housing Administration, which provides mortgage insurance to borrowers through a network of private sector lenders.
The FHA will soon launch a new programme to allow home-owners with good credit history, but who cannot afford their current payments, to refinance into FHA-insured mortgages, Bush said.
He also pledged to work with the Democratic-controlled Congress to temporarily reform a key housing provision of the federal tax code to make it easier for homeowners to refinance their mortgages.
Financial analysts said Bush's proposals were unlikely to have an immediate impact on home-owners who may be in danger of defaulting on their mortgages.
