US President George W Bush and Federal Reserve head Ben Bernanke today unveiled separate plans to help home mortgage borrowers meet their payment obligations amid the current sub-prime loan crisis.

The crisis in the US sub-prime mortgage sector has been caused by US mortgage rates rising sharply over the past year leading to a growing number of sub-prime borrowers being unable to meet their monthly repayments as their initial low rates were raised, leading to record defaults, which has affected a large number of home loan mortgage providers.

As a result banks and investment firms heavily exposed to the sub-prime market have face significant financial difficulty, which was reflected by the recent global stock markets turmoil.

The president noted that the losses were caused by defaults on sub-prime mortgages, higher risk loans offered to people with poor credit ratings or on low incomes, even as he added, "Recent disturbances in the sub-prime mortgage industry are modest in relation to the size of our economy. But if your family''s one of those having trouble making the monthly payments, this problem doesn''t seem modest at all."

The initiatives, however, are not aimed at bailing out lenders or speculators, but designed to help homeowners with risky mortgages keep their houses.

"The government''s got a role to play, but it is limited," Bush said. "A federal bailout of lenders would only encourage a recurrence of the problem."

A key element of Bush''s plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.

Meanwhile Bernanke hinted that rates might be cut as the Fed seeks to promote general financial stability as losses had exceeded the most pessimistic of projections. The US Federal reserve will meet to decide rates on 18 September amid mounting expectations that it would cut the cost of borrowing to ease the current liquidity problems in the financial markets.

Bernanke said it was not the job of the Fed "to protect lenders or investors from the consequences of their financial decisions". He, however, added, "The Fed stands ready to take additional actions as needed to provide liquidity and promote the orderly functioning of the markets."

He said that the Fed had so far released billions of dollars of emergency funds into the financial system in an attempt to ease fears over the lack of available credit. It has also cut the interest rate at which it lends to banks.

also see : General reports on Banks & Financial Institutions