The Bush administration has hammered out an agreement to freeze interest rates for certain subprime mortgages for five years to combat a soaring tide of foreclosures, congressional aides said Wednesday.
The aides, who spoke on condition of anonymity because the details have not yet been released, said the five-year moratorium represented a compromise between desires by banking regulators for a longer time frame of up to seven years and mortgage industry arguments that the freeze should last only one or two years.
It is a fairly narrowly crafted plans, only owner occupied and only if the loan was made in the last couple of years. So it isn't an obviously bad idea, but we shall have to see the final details. This is one case where there are a lot of devils in the details.
Personally, I'm split on the idea. On the one had it would be bad for the economy to let the market crash, on the other, it would be rewarding people that took out bad loans. And it would probably make it harder for people to buy homes in the future, since house prices would be propped up and loan values depressed.
The ones that where told that they where getting a fix rate mortgage and it was really a fixed introductory rate for x number of years is a separate problem. And that really requires those brokers and companies being tracked down and shut, not being let off the hook by mortgage rate deal.