Henry Paulson Says Adjustable Rate Mortgage Deal in the Works.

Treasury Secretary Henry Paulson announced today that he is confident that there will soon be an agreement that will help homeowners avoid mortgage default by extending the fixed period on adjustable rate mortgages.

Over the past several weeks Paulson and other top Treasury officials have been negotiating with some of the major players in the mortgage industry to finalize an agreement that would freeze the lower introductory rates on adjustable rate mortgages. Paulson stated in a speech to the Office of Thrift Supervision that they “are working aggressively and quickly, utilizing available tools and creating new ones, to help financially responsible but struggling home owners.”

These extended fixed rate mortgage periods would apply only for borrowers who are current on mortgage payments but are unable to afford loans when they adjust to higher interest rates. The Federal Deposit Insurance Corp. estimates that some 1.1 million borrowers are in that situation.

Negotiations as to how long the extended period will last are still being worked out. Government regulators are pushing for five to seven years while investors are asking for a shorter period of either one or two years. Paulson stated that he believed that they will come to an agreement quickly. Some expect the administration to introduce the completed deal later this week.

To read more about Paulson, deal coming soon to help home owners, head on over to CNBC.