Is subprime freeze a good idea?

Well, the folks in Washington got a chance to create the perception that they were doing something, but it isn't much.

Let's not forget, this plan is not a law, and lenders are not required to do anything; however, the fact is that many lenders already are allowing home owners to sell their homes in short sales without having to pay back the money.

The Globe published an article about the plan's fine print.

Massachusetts has a new foreclosure law.

Freezing interest rates may help a few home owners, but it's probably just delaying the inevitable.

Read more articles and commentary about the subprime plan.

Most of the coverage of the freeze has been either thin, or wrong. There's no substitute for Tanta at Calculated Risk.

For instance, the plan was not designed to help lenders, but servicers. There's a difference. The firm that handles the mortgage payment is a bank or mortgage company like Countrywide--you know, companies with big trade groups and well-heeled lobbyists. As far as the investors, the people who own these worthless mortgages? No one even knows who they are. (Although, have you taken a close look at your own money market funds lately?)

The real bottom line here is that, by imposing a freeze based on broad rules of thumb, the plan was designed to help servicers continue to do business the quick, easy, and slipshod way. You know, the same way we got into this mess.

There definitely will be a come-to-Jesus moment, where everyone fesses up that trillions of dollars in investments world wide are simply worthless repackagings of loans that will never be repaid secured by assets that were completely overpriced. If we are lucky, that will be followed by another come-to-Jesus, where all the sinners sincerely pledge to go out and hire actual competent professionals, and start practicing old-fashoined responsibilty and honesty in business.

Sadly, that day is not yet.