The Paulsen mortgage freeze plan will make the housing situation even worse for people in the US who are behind in their mortgage or upside down.

1. If it applies to people who are behind in their mortgage already, it will encourage people to become delinquent in order to get in on the "freeze."

2. Adjustable mortgages were 44% of foreclosures as of the second quarter 2007. Most of these were loans that never should have been made. People with poor credit, poor income, gambling on their houses increasing in value. The freeze will prolong the agony for many of these folks who would otherwise get out of their mortgage and simply rent.

(And now, before you continue reading, join my quality email list and learn what you *should* do instead of this freeze baloney. Right now. You will have instant access to my free 25 page Keep Your Home report, and you will be invited to an upcoming free telephone seminar where you can get your questions answered. Privacy assured. Unsubscribe anytime.)

3. How many lenders will want to do an adjustable mortgage going forward? This will kill the adjustable mortgage marketplace and the mortgages that would be available otherwise to help people in a mess to refinance will be pulled from the market and won't be available. The very mortgages that people with credit issues would be able to get otherwise, adjustable mortgages, won't be available when needed most.

4. People will become locked into homes that they should sell now. Instead they will stay and become upside down. Then they will find it difficult or impossible to sell and they will have to walk away leaving the house to their lender. The freeze will create a massive overhang of houses that should be sold, but can't be, thus prolonging the US housing crisis.

If you stay in your house that is declining in value, and if you have no equity, you are gambling that housing prices will reverse and start upwards.

But beware. If millions of other people are gambling the same thing, those houses will hang over there market and prices won't rise for many years.

Some homeowners say "I can stay I don't have to sell" but more people will begin to sell as housing prices go down and as life happens, and they must sell regardless. This will make more house prices fall and more people want to sell but due to the freeze this won't work itself out quickly, but will take many more years.

This is very bad for homeowners.