President Bush announced an agreement with some of the major mortgage firms to freeze interest rates for financially troubled homeowners for five years. Advocates of the plan believe the plan will help prevent a foreclosure crisis. Conservatives state that the plan is a bailout of people who made poor financial decisions.

The plan would only apply to homeowners who obtained subprime adjustable-rate mortgages between Jan. 1, 2005, and July 31, 2007 and is being offered only to people who live in their homes, thus excluding investors and speculators. Eligible homeowners are those who have stayed current with their mortgage payments. The plan may allow some of these people the ability to refinance their mortgages much faster than they could have under previous restrictions.

Some lawmakers have expressed concern that the plan would anger homeowners and investors who stayed out of the subprime mortgage debacle. The idea that the government is rewarding people who made irresponsible decisions and bought homes beyond their means is one that is routinely being heard. In effect, the mortgage industry is basically altering the terms of millions of contracts. Still others talk of protecting the broader economy by stemming the mortgage muddle.

Declining housing prices have triggered mortgage delinquencies and foreclosures around the country. Securities that were backed by these mortgages have seen their value nose-dive. The lending industry was caught unawares. Congress has made several unsuccessful efforts to ease the crisis while lawmakers have expressed concern over the accountability of nonprofit groups that would receive public funds under the administration's plan. Approximately $200 million taxpayer dollars will go to nonprofit groups staffing a national credit-counseling hotline. Tax dollars will not be used to directly subsidize the freeze on rates. That cost would be carried for the most part by lenders, investors, and by fees collected from homeowners who participate in the freeze.

Both sides of the political aisle are showing support for this measure. The plan has ben criticized by many, including Sen. Hillary Rodham Clinton (D-N.Y.), who states the plan does not go far enough. Ms. Clinton called for a moratorium of at least 90 days on subprime mortgage borrowers facing foreclosure and a five-year rate freeze on all subprime loans. She further states "Although the administration is finally giving the foreclosure crisis the attention it deserves, it seems that President Bush is going to give struggling homeowners far less than they need."

Treasury Secretary Henry M. Paulson Jr. has meanwhile endorsed another agenda that would temporarily let Fannie Mae and Freddie Mac insure mortgages above their current limit. This would allow people to get home loans higher than $417,000 without paying higher "jumbo" rates. It is believed that Paulson would like to ie this action to a broader overhaul of Fannie and Freddie.