Borrowers may benefit from mortgage relief plans
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The roundtable is involved in a separate program called Hope Now, but the interest rate freeze isn't part of that initiative, according to Keosha Burns, a spokeswoman for the group. "The meetings about the freeze have not been Hope Now meetings. The Treasury secretary just called in a few individual companies to have a discussion," she said.

"Every company has a different way that they are doing business, so it's a matter of getting everyone on the same page to help everyone in a uniform manner," she added.

Subprime freeze coming?
Paulson's plan wouldn't use government funds to pay homeowners' mortgages or compensate lenders or investors for losses they've sustained. However, the Bush administration has asked Congress to authorize funds to expand the capacity of the national nonprofit credit counseling agencies. That money, said to be $200 million, may or may not be forthcoming since the appropriations bill hasn't yet been finalized, Paulson noted.

A freeze on subprime ARM interest rates could succeed if credit counseling agencies acted as mediators between lenders and borrowers and helped borrowers refinance their mortgages before the freeze expired, suggested Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling.

That's because a rate freeze would be only a temporary "Band-aid that would postpone the problem, unless the counseling agency can step-in and educate the consumer on how to prepare for what is ultimately going to be their house payment. It's not a long-term solution unless the situation changes," she said.

A rate freeze might encourage some homeowners to delay refinancing even if they were able to do so, yet others may be motivated to take action, Cunningham noted.

"Hopefully, they were so scared by the inevitable (foreclosure) that was facing them today that they will take the necessary steps to right it for tomorrow," she said.

Neither Paulson's plan nor the interest-rate freeze would allow federal bankruptcy courts to modify existing mortgages or address the way new loans are originated.

"While loan modification could be a good supplement to bankruptcy reform, it does nothing to address the reckless lending or market incentives" that created the current problems, Reuss said.

Marcie Geffner is a real estate reporter in Los Angeles.