Sources: Bush to outline 5-year rate freeze plan

[Little-Acorn]

I hope this was merely a trial balloon floated by the Bush admin, to gauge public reaction. And I hope the overwhelming reaction is: "DON'T EVEN THINK ABOUT IT, CHARLIE!!!"

Bush has done liberal things before (Perscription drug entitlement, exploding spending, signing Campaign Finance "Reform"). But this one would take the cake, almost as badly as FDR's and Nixon's wage&price freezes. Bush has been good on some things (tax cuts, appointing law-abiding justices, war against terrorists), but he keeps swinging erratically liberal.

A lot of people screwed up, buying homes with adjustable mortgages they couldn't afford. Surprise, surprise, they're getting foreclosed on nowadays. I did that too, back in the early 90s. What did I do when rates went up? Sold it, of course, and started renting. I didn't wait for the people who had trusted me to pay back the money, to get screwed by my own inaction. We had a deal that I'd agreed to - did they deserve that?

Now GWB seems to think they DO deserve that. He hasn't explained why. If he wants to do this, he (and Congress) should do it honestly (if it can be called that). They should mandate that mortgage rates rise as they had been contracted to do, pinned to whatever index they are, and that the homeowners pay the higher payments. And then GWB and Congress should decree that the mortgage companies write a check back to these poor, benighted homeowners, for the difference between the real rate and the lower rate they want to "freeze" at. The money would come out the same either way.

Then let Bush & Congress explain why the mortgage companies should write those checks to the homeowners - what did the companies do to deserve those penalties? They might consider asking Hillary and Edwards for their explanations, since the article mentions that they're considering similar plans.

Such legislation would be, in fact, properly called a "Bill of Attainder" - a law that directly requires somebody to pay money or endure some other penalty without any crime or guilty verdict being rendered. And guess what: Bills of Attainder are unconstitutional, and for very good reason. And that would be no different in substance from what this Reuters report describes.

BTW, there were also a lot of people for the last few years, who looked at houses, gauged the market, saw they couldn't afford a house if the rates went up on their adjustable mortgatge... and decided NOT TO BUY THE HOUSE. And still more who bought, later found the rates rising, and sold to avoid a foreclosure. In other words, they made wise, or at least honest, decisions.

And now the joke's on them! If they had been stupid instead of smart, or hadn't made the effort to uphold their end of the deal, they would now be able to keep their house! Here comes another government policy to help the stupid, weak, and/or conniving, while the people who played it honest and straight lost out. Yep, that's what I want MY government to do, all right!

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http://www.reuters.com/article/polit...rpc=22&sp=true

Bush to outline 5-year rate freeze plan: sources
Wed Dec 5, 2007 2:12pm EST

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by Patrick Rucker and John Poirier

WASHINGTON (Reuters) - President George W. Bush is expected to outline on Thursday a plan to freeze mortgage rates for five years for many U.S. homeowners facing sharp increases in their monthly payments, industry sources said on Wednesday.

Final details of the plan are still being worked out after a trade group that represents large mortgage investors presented its framework for implementing a broad rate freeze to the Treasury Department late on Tuesday, the sources said.

"The president will make a statement on housing issues tomorrow afternoon," a senior administration official said, declining to elaborate on details.

The sources, who are familiar with details of the trade group's pitch, said the plan envisions covering subprime loans taken out between January 1, 2005, through the end of this past July, with rates that are due to reset over the coming 2-1/2 years.

An estimated 1.8 million U.S. homeowners who took out loans with low teaser rates face pricey loan resets next year alone, the Federal Reserve has said. Officials fear half a million borrowers risk losing their homes.

Treasury Secretary Henry Paulson has worked closely with the investor trade group -- the American Securitization Forum -- as well as mortgage servicers and lenders to hammer out a comprehensive plan to modify troubled loans.

Rising defaults on U.S. subprime loans, aimed at borrowers with a spotty credit history, have spooked financial markets around the globe in recent months, tightening credit conditions and threatening to derail the U.S. economy.

Many sinking loans had been repackaged as securities and sold to investors, who are having a tough time getting a handle on the value of their assets.

The plan to temporarily freeze mortgage rates is primarily aimed at borrowers who can afford their existing rates and who are current on their payments, but who would face default when the rate resets at a higher level.

Under the plan, homeowners who have shown they are a reasonable credit risk but who could not afford their homes with higher rates would qualify for "fast-tracked" loan modification and a five-year interest rate freeze.