URBALO

Finally, the Bush administration has decided to step in and try to help those that are finding themselves in a foreclosure situation. The new plan is suppose to help 1.2 million distressed homeowners.

There is a catch though: mortgage interest rates will be frozen only for ARM borrowers who are not yet in foreclosure.

Here are a few main keypoints:

1. The plan will include a five-year freeze on interest rates for borrowers current with their monthly payments, but the freeze is limited.
2. It excludes anyone more than 30 days late at the time the mortgage would be modified or anyone who has been more than 60 days late at any time within the previous 12 months.
3. It also only covers borrowers with adjustable rate mortgages (ARMs) resetting beginning in 2008 and leaves out any who are judged capable of continuing to make mortgage payments at the higher reset rates.
4. Borrowers who can’t afford the loan even at low introductory rates also will be ineligible.

The plan is very courageous but there are too many impediments to its widespread adoption by investors and servicers.

To read the full details on this, go to Money CNN