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 November 22, 2007

Governor Strikes Deal to Freeze ARM Rates
California Governor Arnold Schwarzenegger announced Tuesday, November 20, that he had struck a deal with four mortgage lenders to freeze rates on ARMs in an effort to save thousands of home owners from foreclosure.
The four lenders involved in the deal are Countrywide Financial Corporation, GMAC Mortgage, HomeEq Servicing and Litton Loan Servicing. The ARM loans these companies have granted account for more than 25% of the state's total subprime loans.

The deal asks lenders to freeze loan rates for home owners who can show that they are unable to afford monthly payments that would adjust to a higher rate than they are currently paying. Rates could be frozen for as long as five years, depending on each individual situation.

The arrangement involves the four lenders contacting borrowers before their individual rates adjust, and to establish a streamlined process for the handling of modifications of their loans.

Supporters of this action believe that California is the only state to take such action regarding the current subprime lending crisis, and see the Governor's actions as a "welcome intervention."

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