Paulson to Buy Mortgages

One of the criticisms of the federal bailout scheme is that no one has offered relief to homeowners whose bad mortgages set off the crisis in the first place. Treasury Secretary Hank Paulson is considering buying securities that finance new homes, but mortgage lenders will have to set interest rates on 30-year fixed-rate mortgages at 4.5 percent. The cost of the program is unclear, but the government could raise money for it by selling bonds at 3 percent, allowing it to turn a profit, as the mortgages will yield 4.5 percent returns. The idea may lift the slumping real estate market. There has already been a rush to refinance since the rates slipped so low.