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Interest-rate freeze harms more than helps

Perspective: Responsible homeowners pay for neighbors' risky behavior

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The Bush Administration's plan for lenders and loan servicers to freeze monthly mortgage payments for selected homeowners who aren't able to afford the reset interest rates on their adjustable-rate mortgages is more about politics than governance and is likely to hurt more homeowners than it helps. Indeed, the plan seems to have been designed to benefit a relatively small group of people at the expense of both their neighbors and the broader economy that the plan is supposed to protect. The main benefits will accrue to those folks whose mortgage interest rates will be frozen at artificially lower levels. Some of these people were victimized by predatory lending practices and deserve some sort of assistance. But most of these folks knowingly took out high-risk mortgages because they wanted to buy a home they otherwise couldn't afford, they counted on price appreciation to create a windfall and guarantee their ability to refinance later or they wanted to convert the equity i...