We have all heard the saying that if it is just too good to be true that is probably is. And yet we seem to keep falling for the "good deal". This saying is coming home to haunt many home buyers who took advantage of "teaser" home mortgage rates over the past several years. These teasers sucked many of the unwary borrowers into a trap that has now snapped shut and they face losing there homes to foreclosure.

Thousands of home owners have already lost their homes to foreclosure and thousands more face this possibility every month.

A plan is now being negotiated by the Bush administration and some of the major home mortgage lenders to bring some relief to the situation. Full details have not been disclosed as this is still a work in progress.

Expected to be announced within a week by Treasury Secretary Henry Paulson, the plan hopes to help virtually all groups impacted by adjustable rate mortgages (ARMs) that adjusted to levels quite unexpected by the borrowers. Those homeowners who have been unable to keep up with their payments even at the low teaser rates would not be included in the plan.

The plan was labeled "an important building block in our efforts to address the mortgage and credit crisis" by Rep. Rahm Emanuel (D-Ill.). He has asked the  administration's help in approving a House bill designed to ease the housing problem.

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, was "encouraged" by the move to "seek large-scale loan modifications for borrowers, who, facing interest rate resets, are in danger of losing their homes."

Any plan that could help slow the worsening credit crunch in America and across the globe has got to be given careful consideration. I can't help but wonder though where the interests of our Washington representatives actually lie. Are they really trying to look out after Mr. and Mrs. America or with the large financial institutions and investors who will benefit greatly by a government bail out?

In any case, we need to keep in mind that there are better ways of buying our home with little cash and no credit than to fail prey to a broker's "too good to be true" teaser mortgage.

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Filed under: Foreclosure Investing

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