Mortgage-Rate Freeze Draws Backlash

Plan to give borrowers a break called 'morally repugnant'
By Sam Gale Rosen,  Newser Staff
Posted Dec 1, 2007 11:51 AM CST
Paul Krugman gives "kudos to the Bush administration" for the plan.   (Getty Images)
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(Newser) – Not everyone is applauding Treasury Secretary Hank Paulson's plan to freeze adjustable mortgage rates on distressed home loans to help contain the spreading subprime crisis. Some analysts think the plan will only postpone foreclosures, rather than preventing them. And now that loans are bundled and sold to investors, some of those investors resent what they see as government interference with their property, the Wall Street Journal reports.

"There's a part of this that's just morally repugnant. The problem is that the policy makers are talking to servicers about giving away other people's money," says one real-estate consultant. On the other hand, the Journal says, the plan is winning praise from a diverse spectrum of analysts and lawmakers, including Paul Krugman and Barney Frank.