Here comes the freeze

Well, it looks like they're going to do it.

According to this report from the Associated Press, the Bush Administration will announce tomorrow that an agreement has been reached to freeze the interest rates on certain adjustable subprime mortgages for five years in what will probably amount to the first of many fingers being stuck in the "housing dike", formerly known as the "housing boom".

You don't seem to hear the White House marveling at the homeownership rate much anymore - it's about time they got back around to talking about the nation's housing market.

Will this plan help to reduce the number of those pesky "FORECLOSURE" signs now dotting neighborhoods all around the country?

Probably not.

But, it makes it look like the government is doing something about the problem.

In my brief (and, thankfully, unsuccessful) foray into management many years ago, one of the things that I learned was that you never want to be accused of doing nothing, no matter how intractable a problem.

It matters little how hopeless the task may really be on closer inspection - people like it when it looks like you're trying to solve their problem even when you know you can't.

The Bush administration has hammered out an agreement with industry to freeze interest rates for certain subprime mortgages for five years in an effort to combat a soaring tide of foreclosures, congressional aides said Wednesday.

These 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 as much as seven years and industry arguments that the freeze should only last one to two years.

Another person familiar with the matter said the rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.

The administration said that President Bush will speak on the agreement at the White House on Thursday and the Treasury Department announced that Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson would hold a joint news conference Thursday afternoon with officials of the mortgage industry.

If this is a sign of things to come, I can't wait to see what they do next year - when the election season gets into full swing.

And if you're one of those lucky homeowners who, just a couple of years ago, took a chance on one of those risky adjustable rate loans with a teaser rate to get into a house that you really couldn't afford - while your neighbor opted for a fixed-rate loan and settled for a house they could afford - well then, CONGRATULATIONS!

It looks like you're going to get bailed out.