WASHINGTON – At least one thing is clear about President Bush’s plan to help people trapped by the mortgage meltdown: It is an industry-led plan, not a government bailout.

Although Bush unveiled the plan at the White House yesterday, its terms were set by the mortgage industry and Wall Street firms. The effort is voluntary and it leaves plenty of wiggle room for lenders. Moreover, it would affect only a small number of subprime borrowers.

The plan was the target of criticism from consumer advocates who said its scope was too narrow, and from investment firms, who said it went too far. Others warned that the plan, by letting some stretched homeowners off the hook, could encourage more reckless borrowing in the future.

“The approach announced today is not a silver bullet,” said Treasury Secretary Henry M. Paulson Jr., who hammered out the agreement. “We face a difficult problem for which there is no perfect solution.”

The heart of Bush’s plan is a cautious attempt to help troubled homeowners by persuading financiers to freeze mortgages at low introductory rates for five years, but without actually forcing the hands of lenders and investors who hold the mortgages.

One of the financial industry’s lead negotiators estimated that at most 20 percent of subprime borrowers whose payments will increase sharply over the next 18 months – 360,000 out of 1.8 million people – would qualify for rapid consideration of a special five-year freeze on their interest rates.

The number of people who actually obtain that help would be smaller, because each borrower would face a battery of tests aimed at weeding out those who are considered too hopelessly in debt and those who make too much money to justify relief.

In one curious twist, the plan could eliminate many people who have good credit scores or who managed to improve their credit scores, because the good ratings would be a sign they did not need help.

“Talk about moral hazard,” remarked Rep. Barney Frank (D-Mass.) the chairman of the House Financial Services Committee. “We’ve all told people, don’t go any more deeply into debt. Now we’re saying that people who go more deeply into debt will have an advantage over people who don’t go more deeply into debt.”

The administration’s theory is that there is a “sweet spot” in the market where it makes more financial sense for lenders to offer some relief than it does to foreclose on homeowners.

Most analysts agree that there is indeed a sweet spot of some sort. Investors typically lose 40 percent or 50 percent on homes that go into foreclosure, and the cost of shielding borrowers from a big jump in rates can be much less than that.

“I think there is a sweet spot,” said Bert Ely, a banking consultant in Alexandria, Va. “But I worry that the sweet spot is much smaller than people think it is. And as housing prices continue to decline and debts pile up, I fear the sweet spot will shrink.”

Administration officials estimate that about 500,000 subprime borrowers are in danger of losing their houses in the next 18 months as their low teaser rates expire and their monthly payments jump by 30 percent or more. Outside analysts warn that the number of foreclosures could be much higher.

The Mortgage Bankers Association reported that the number of new foreclosure proceedings hit an all-time record in the third quarter, and that the delinquency rate on mortgages climbed to the highest level since 1986.

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