The Backup Plan for Sub-Prime Mortgages

Here's another Kiplinger article about mortgage rates and the relief in the works:

It's a private sector plan brokered by the government that aims to prevent a wave of expected foreclosures. It would do that by allowing troubled homeowners facing interest rate hikes in the form of resets in the next two years to keep their lower introductory, or "teaser," rates for up to five more years.

Those whose rates have already reset are out of the picture, as well as non-home-owners, people who can't pay at the current rate, or those already in arrears or a month behind or more. So, basically, those who've weathered the first storm are in for some relief, with mortgage companies and their investors essentially footing the bill. While there is some talk of investor backlash through lawsuits, they say the litigation risk is "manageable," probably because nobody wants to see the entire economy tank because of this, or the housing market go into a freefall.

All in all, not a bad plan, although it's a shame there has to be a plan at all.