President Bush’s plan to freeze interest rates for five years for some homeowners facing foreclosure is coming under criticism because the plan won’t help most homeowners who have subprime mortgages. The Center for Responsible Lending estimates the plan will only help about seven percent of subprime borrowers, or about 145,000 families. Experts say up to two million homes face possible foreclosure in 2008. President Bush said one beneficiary of the freeze should be investors.

bq.President Bush: “The rise in foreclosures would have negative consequences for our economy. Lenders and investors would face enormous losses. So they have an interest in supporting mortgage counseling and working with homeowners to prevent foreclosure. The government has a role to play, as well. We should not bail out lenders, real estate speculators, or those who made the reckless decision to buy a home they knew they could never afford. Yet there are some responsible homeowners who could avoid foreclosure with some assistance.”

The freezing of interest rates would only apply to qualified homeowners who got adjustable-rate subprime mortgages between January 1, 2005 and July 31 of this year. Any homeowner who is behind in mortgage payments will not be eligible for the deal. President Bush unveiled the plan on the same day that the Mortgage Bankers Association reported that home foreclosures surged to an all-time high between July and September.