Mortgage response reasonable

Just in time for Christmas, the Bush administration has come up with some holiday help for homeowners (and lenders) who are in over their financial heads in the burgeoning mortgage crisis.

The plan is relatively simple: a five-year freeze on loan rates for those who qualify.

There are some people who cry foul over what they see as government meddling in the free-market economy. At the other end of the spectrum are critics who say the Bush administration plan is unfair and doesn't go far enough.

The answer to the first complaint is that this is a justified government intervention. The response to the second attitude is that this is a good start.

The aim of this plan is pretty straightforward: to keep a host of subprime borrowers in their homes rather than dropping them into the world of foreclosure, bankruptcy and, eventually, vacant homes.

The numbers are daunting: An estimated 1.8 million homes have subprime mortgages that are scheduled to reset in the next two years. Original mortgages were 7 percent to 8 percent, but the rates will climb as high as 11 percent without the freeze. That increase could add an additional $350 to a typical monthly mortgage payment of $1,200.

That's a recipe for disaster.

The bottom line is that it's a good idea to stave off a wave of foreclosures that could not only seriously damage the nation's housing and financial industries, but also reverberate through the rest of the country's economy.

Home construction and sales have for years been a primary driver in the economy - perhaps even more impressively in the Flathead Valley than most other places.

It's reasonable, then, to take steps to preserve that economic linchpin, particularly when averting a mortgage meltdown has the potential side benefit of keeping the overall economy from lurching into a recession.

The rate freeze shouldn't be seen as the final solution (nor should it absolve either borrowers or lenders from some blame for overreaching).

In the future, it might be worthwhile for prospective homeowners to read and really understand the fine print before closing that loan. They need to understand the highest interest rates they might face, not just those attractive teaser rates.

And lenders need to be less aggressive about pushing people who really shouldn't be getting massive home loans into situations they can't afford in the future.

It might take some tighter government regulation to accomplish these goals, but at the least it also will take more self-control by borrowers and lenders than has been shown in the past.