WASHINGTON – Dec. 3, 2007 – If lenders temporarily freeze low introductory interest rates on home loans made to risky borrowers before they soar, it would be a modest fix for the country’s fractured housing market.
The problems are so far-reaching, analysts say, that an emerging Bush administration-backed plan – nicknamed “teaser-freezer” by one economist – won’t spare many borrowers, or bankers, from the pain of escalating foreclosures and defaults.
Edward Yardeni, an economist who runs Yardeni Research in Great Neck, N.Y., called the plan “better than doing nothing,” but added that it is “not necessarily going to make a big dent in the foreclosure problem that’s facing us” because thousands of borrowers still might not be able to make their monthly payments.
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