100% BS. This plan (and everything like it) just shits on those of us who were smart enough to take fixed-rate mortgages. The lesson from this is: just do whatever you want, if it bites you in the ass you'll get bailed out.

And this helps people that got mortgages that were not 2/28 and were 3, or 5 year arms that are most likely half of all the arms anyway?

Totally unfair to those of us who live within our means. I was unwilling to take the risk of a rate jump so have a fixed mortgage which was as a higher rate than a variable.

Now the buyers in default got to benefit from the low variable rate and now that it has gone up, they get bailed out.

Who pays for this bailout, all taxpayers, even those who were responsible with their mortgages in the first place. Who profits, the greedy lenders who never should have approved these mortgages and the irresponsible borrower who are getting bailed out.

Just to point out theres a big reason to help these people out as this could completely wreck the entire economy of our country and then the worlds next.

@darkened: Maybe that's why we humans need though? A wrecking of economies so we don't keep making the same mistakes.

Bad bad bad idea, govt messing with the market that is trying to correct itself is never good. I will admit I was able to get a loan in 2006 that I might never have gotten today due to me being self employed and trying to prove every dime I make. I got a fixed rate loan though and am well within my means, but even I have friends who played the ARM game and did interest only! They told me I was stupid to go the old way and many of them have had to sell off their houses and slide back into apartments.

How does he propose to do this? Just a law?? Won't this be challenged and WON in federal court?

@chrisgoh:

I want an interest rate reduction on my fixed rate mortgage! Without a refi....

Nice idea in theory, but there would have to be *serious* resources dedicated to the tremendous economic impact of establishing such a freeze. Considering how many lenders, funds, investors and others have planned and acted based on the schedule of mortgage rate increases, as well as the many loans that were made by the lenders on the understanding that they would get more money later on, the repercussions throughout the economy may be disastrous, even more than allowing the defaults to occur.

I have little faith that this administration, if the story is correct, can pull this off. It's much more of a PR effort than sound fiscal policy.

@Franklin Comes Alive!: I'm with you. THIS IS TOTAL BS. Couple of years ago I took a 30 year @ 5.63% because I knew the ARMs @ 4.75% would be a bad bet. Now they're locked in at that awesome rate?

Fine, give them that rate... for a f'in 60 year term, and absolutely no refi options EVER.

@darkened: I understand the reason. But that does not make it fair. A fairer way to do it would be to offer some kind of additional tax deduction for mortgage interest, perhaps even a proactive credit. This would help the people who are over their heads as well as reward those who made better choices. This would help save peoples houses and stimulate the economy with the resulting purchases by those who were responsible and received free money. Lenders should foot the bill.

What a disaster. Everyone above pretty much captured what a slap in the face this is to those of us who were responsible. My fiance and I had to fight for an 80/20 30-year fixed mortgage last year, the credit union kept trying to push a 40-year 100% ARM on us! Now people who took ridiculous offers like that will end up in a better financial position than us.

@Franklin Comes Alive!:

Except you know the idiots who borrowed subprime will drag the rest of the prime borrowers down with them.

When everyone defaults in subprime, your home equity will dive right down under too. When that happens, credit all around will be nearly impossible to get. Borrowers with good credit won't be able to tap into their equities.

We've gone beyond an isolated problem. The stupid roommate set the house you share on fire. Nobody wins.

I have great credit and a fixed mortgage. It's not my direct problem. I'm also an economist and I know the ripple effect of a sudden liquidity crisis. Everything goes down the tubes like in Argentina's financial meltdown in 2000.

@cashmerewhore: That be even simpler! Freeze the ARMS and knock a half a point off of fixed mortgages. I've currently got a 15 year fixed at 4.375, so 3.875 would be even sweeter.

Yeah, I understand why there may be an effort to protect these people and to "save" the economy from collapsing for a few more years. (or at least until they can blame a Dem President)

But the fact is that these people made a choice to get into these loans. And the lenders made a choice to offer loans to these people. So I say, let them eat cake.

Who says people will be able to afford the through-the-roof rates in 5 years? Or even in the mean time as oil and food prices go sky high? He's just sticking his finger in a house-sized hole in the hoover dam.

Based on the few details that I've heard, the govt is not putting any tax dollars into this plan - they just got the lenders together and convinced them that it was in their own best interest to work together and agree on a plan. Also, the interest rates on the loans covered by this plan are not the really low ARMs, but are the subprime loans with rates that are already around 8% - 10% (before any adjustment). We'll have to wait for the formal announcement to be sure.

So while I agree that it sucks that these people are getting bailed out, and I'm getting squat, at least I'm not paying for it. And it helps to keep my property values from dropping as much.

As I understand it, the people paying for this are going to be the investors who bought these mortgages, who aren't going to get the return they thought they were going to get. Which is as it should be.

I cannot believe the government would do this. Our founding fathers are rolling in their graves with shame...

This, then next Hillary will become president... I feel like a man without a country.

Rumor from a reliable source. The rates will be fixed for 5 years, BUT the difference will be added to the remaining principle, and dragged out over an extended period. They will get a break now, but over the long term will still pay much more then those who took a fixed rate. This should slow, but not stop the housing value reductions, which will allow those who are going to get out of the houses do so over a longer period of time.

I understand that letting that many houses forclose is bad. However I can't help but be pissed that I am going to be the one footing the bill for their idiocy yet again. I'm just frustrated with the increasing socialist tendancies of our government.

@CarlR: I hope your right. At least under that scenario while I might not be getting anything, at least I'm not paying to bail these people out. Of course indirectly I still am because I'm sure most anyone in a mutual fund has at least some exposure to the paper backing these mortgages.

Lesson Learned - Spend beyond your means and the government will bail you out. Ridiculous!

Why not go all out and just have the government pay off the mortgage for you?

@HRHKingFriday: He's just concerned with dumping a recession on the next president (while avoiding it himself). Anyone who really thinks he's doing this to actually fix anything needs their head examined.

So what will this do to home prices? Up, down, plateau?

Maybe he can also implement a 90 day wage/prize freeze to combat inflation plus institute price controls on retail gasoline prices, like Nixon did in the early 70s too.

I fully expect to profit from this plan. By reducing the number of forclosures, the market will have a chance of stabilizing, thereby making it very likely that I will be able to sell my house for something over the fire-sale price.

People who bought mortgage-backed securities will see lower returns, but the effect will be diluted since very few people invest their whole portfolio in a single type of security.

@Franklin Comes Alive!: RUDE! How many of these people are first time buyers, or upgrade buyers with good credit that didn't know what they were doing.

I don't think it has anything to do with SMART ENOUGH, but more on propaganda. These loans were pushed, pulled and dragged out touting the LOW LOW LOW rate and that's what people see.

I would hope that I wouldn't have been fooled by this "scam" but, c'mon. Why do you care if it doesn't effect you at all? Plus? how does it fix the issue if your ARM loan is HUGE...or is it freezing them BACK to the origination rate? I'll have to read more.

@chrisgoh:

Guess the smart ones (without ARMs) won't benefit from this.

But isn't it just delaying the inevitable? Who's to say they won't default when the freeze is up? Wouldn't it just create another housing slump with them all entering forclosure later?

@cashmerewhore:

This is to buy time. The economy was too fast and loose the past 5 years with sloppy lending practices and a government asleep at the wheel.

@sibertater: Who cares if they didn't know what they were doing?

When did ignorance become acceptable?

Wait--I took out my ARM late 2004--does that mean I don't qualify? I'm not even sure I'd qualify either way but hey, if others can get this--then I want it too!!! And what exactly is a subprime mortgage? I have a mortgage, 4.75% for 5 years so it's an ARM but is a subprime? I could afford a higher payment BUT I'd much rather get the 4.75% for another 5 years.

If I miss out on this deal by 2 months, I'm gonna protest.

This should be paid by a tax on mortgage brokers and companies. That way the guilty parties pay up...

@Geekybiker: You mean fascist tendencies. This is a bailout for the corporate banks.

@sibertater: Not to say there aren't a few legitimate sob stories out there, but my overall opinion of the situation tends towards a Darwin-like theory where ignorance is not an excuse. I'm a first-time buyer, and I sat down, did the research, did the math, and went with the responsible mortgage.

It's time to let people and companies fail for the decisions that they made. Then, and only then, do you have reason to believe it won't happen again (for a while).

No more government buyouts. No more federal involvement.

This goes for airlines and Amtrak as well.

@sibertater: "RUDE! How many of these people are first time buyers, or upgrade buyers with good credit that didn't know what they were doing."

Why should we be responsible for their not knowing what they are doing? A home is probably the biggest purchase of your life. If you don't know what you are doing, you should find out. They signed the documents, if they did not read/understand them, again, that is their own fault.

@webwbr: Now you know how the rest of us feel.

Damn, I was looking forward to some terrific real estate investment opportunities as prices fell.

Chill, people. This is NOT coming out of your tax dollars. It's coming out of the pockets of the lenders and mortgage pool holders themselves -- they won't be getting higher interest.

What it will do is settle things down for a bit and spread the pain over a few years, instead of snuffing out the economy with the current pillow over the face.

For those of you who think anyone who got an ARM, subprime or not, should die a slow and painful death while you watch and cheer, you'll still get to laugh at plenty of borrowers whose loans don't fit the time period or underwriting requirements of this proposal.

You still get to do plenty of hatin', but this will mitigate the effect a tiny bit on the economy as a whole and on your own property values.

I'm so torn on this. I HATE the idea of the government meddling in the private market and telling a lender that they cannot raise a rate that was contractually agreed on. However, I also understand why this needs to be done. It involves no tax dollars, because they are simply telling the lenders they can't raise the rates. But it will still have financial implications for everyone as the lenders/banks/market tries to recoup the lost profits. Ultimately, I probably fall on the side of some action being necessary, but I just can't bring myself to agree that this is the way to do it. I would almost rather see the government provide some other bailout, via taxes or whatever, even if it means spending money than to see them meddle in the private sector. I think it really damages the way our system works, and effects the integrity of the private mortgage market. I think maintaining the integrity of the system would be worth the government throwing in a few bucks.

@ironchef: the government asleep at the wheel? I want them no where near the wheel of the economy. When the gov't meddles, like they are doing right now, then everyone loses.
I think there was the potential for a great lesson to all Americans about fiscal responsibility that will be wasted if this gets implemented.

I think the naysayers are missing the point. The government HAS to do something. Shady lenders let too many people get loans that they couldn't afford. Either the government acts, or the loans go bad. If the government acts, we get screwed. If the loans go bad, we get screwed harder. It just depends on how hard you like getting screwed.

But unless this package includes a nice hard slap in the face for the lenders, it's pointless anyway. The government's willingness to bail them out without imposing sanctions or new rules is like a parent who buys a kid a new car every time he wrecks it - there's no learned cause and effect, but a whole lot of needlessly wasted money.

This is COMPLETE and UTTER garbage. Look NOBODY ever signed one of these bad loans with a gun to their heads. This is ridiculous. What ever happened to CONSEQUENCES for one's actions? This INCLUDES mortgage houses and banks (who are the REAL reason Bush is doing this, he simply can't have people not paying their GOP donor bankers). I hope anybody associated with a ballooning loan they can't afford loses their houses. I hope any company who made millions and millions and is now stuck goes belly up.

You pays your money and you takes your chances.

Also, what the Hell kind of Republican IS GWB? This goes against every conservative principle known to man.

This would be fair: Adjust ALL existing mortgages down to 4.5% and be done with it.

Some people are so busy in their grade-school rants about, "This isn't fair that those stupid homeowners are getting a break," are missing the point. Bush couldn't care less about the hapless people who were encouraged and/or deceived into taking out mortgages they can't afford. He's bailing out the banks, and rich investors - including his many friends. And forestalling a recession until it can be blamed on the Democrats, is probably another factor.

Interesting, how Joe Schmoe - who can't pay his mortgage and is getting bailed out - is more hated than the banks that made the wrongful loan.

I do not trust Bush on anything. He has never cared about the middle-class. He has lied over and over to us . Everything he supports is always to help the corporations and rich. Besides, he is an idiot and wouldn't know a good idea if one popped into his alcoholic, cocaine damaged monkey brain.

@zouxou: How does this save them? The mortgage companies could do this themselves if they wanted? This will keep the housing market inflated and will prevent people from entering the market.

@pkrieger:

The Government was asleep at the wheel in the late 80's where they allowed S&L's with sloppy balance sheets and loose lending requirements nearly wiped out savings accounts of depositors.

You forget its not just the lenders that will be screwed. The people who bank at those lenders with good credit will pay too.

Look at Etrade's meltdown. All those depositors will be screwed just because all the sub primes are dumping their property on the market in a panic.

The private market is more than capable of screwing things up nicely. thank you. It's up to banking regulators to clamp down on sloppy private banking practices.