The Bush administration and major financial institutions are close to agreeing on a plan that would temporarily freeze interest rates on certain troubled subprime home loans, reports the Wall Street Journal on Friday, citing people familiar with the negotiations. An accord could reassure investors and strapped homeowners, both of whom are anxious as interest rates on more than 2m adjustable mortgages are scheduled to jump over the next two years, says the Journal, noting that the plan could also give a boost to the Bush administration, which is facing criticism for inaction amid the recent housing turmoil. According to the Journal, the plan is being negotiated between regulators including the Treasury Department and a coalition of mortgage-related companies including Citigroup, Wells Fargo, Washington Mutual and Countrywide Financial. People familiar with the talks say the individual members have agreed to follow any agreement reached by the coalition, which is called the Hope Now Alliance. Details of the plan, which could be announced as early as next week, are still being worked out. In general, the government and the coalition have largely agreed to extend the lower introductory rate on home loans for certain borrowers who will have trouble making payments once their mortgages increase, the Journal says. Exactly which borrowers will qualify for the freeze and how long the freeze would last are yet to be determined. Under one scenario, the freeze could run as long as seven years. The parties are developing standard criteria that would determine eligibility. The criteria should be finalised by the end of year. http://ftalphaville.ft.com/ Some Resistance Mortgage-industry lobbyists have argued an across-the-board solution is difficult to apply. Rewriting contracts also risks moral hazard -- encouraging borrowers to take on more debt in the expectation of being bailed out if needed later. ``It is really an indiscriminate procedure that would violate the terms of the contract that provide for loan-by-loan decision making,'' George Miller, executive director of the American Securitization Forum, said in an interview this month. A broad approach would ``significantly disrupt the reasonable expectation of investors'' in the $7.1 trillion market for bonds backed by mortgages.