U.S. feds, banks work to freeze loans

WASHINGTON, Dec. 1 (UPI) -- U.S. Treasury Secretary Henry Paulson says he's about a week away from disclosing a plan to suspend increases for many borrowers with subprime loans.

Paulson and representatives of the nation's largest financial institutions are in talks to freeze the interest rate on subprime loans with adjustable rates, The Boston Globe reported Saturday.

Still to be determined is the length of the freeze, who would determine which borrowers are eligible and whether investors holding the rights to collect loan payments would be compensated, the Globe reported.

Major investors still need to be convinced that such a restructuring would avoid enough foreclosures to make it worthwhile to give up additional payments, financial analysts told the Globe.

The restructuring could help as many as 2 million homeowners keep their property, said John Taylor of the National Community Reinvestment Coalition, a consumer group.