A Subpar Plan to Save Subprime Borrowers

Paulson talked about the importance of preventing foreclosures now but concluded, "Under the worst conditions, you would be . . . going through a modification or a refinancing program. But we'll have five years to deal with it."

And there you have it, folks. That's been the problem all along.

We are in this predicament because homeowners were told not to worry about their ridiculously low interest rates because they could refinance later before the rates reset. Or they were delusional in thinking they could afford future rate increases if they couldn't refinance.

Don't worry. Be happy.

Well, people aren't happy now. There's not much hope for a lot of people. Declining home values are preventing homeowners from refinancing. Incomes didn't rise enough to support higher mortgage payments.

Things weren't getting any better, so what makes the administration think that in five years, home values will recover enough to bail people out? What makes it think that the same foolish people who got themselves into these loans will be better off financially in five years?

And what about prime borrowers, people with good credit who refinanced with interest-only or other exotic mortgages and created a situation in which they owe more on the house than they borrowed?

Who is going to help borrowers who are currently in crisis? I guess it's appropriate that this initiative is called Hope Now. That's because the administration and the mortgage industry are still hoping that things will get better.

But hope alone and a fix for a fraction of the folks facing foreclosure just aren't good enough.

¿ On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.She also has a new personal finance call-in show that airs Sundays on XM Satellite Radio, Channel 169 "The Power," from 8 to 10 p.m.

¿ By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

¿ By e-mail:singletarym@washpost.com.

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