Subprime plan to reach as many as 340,000: UBS

NEW YORK (Reuters) - The plan to freeze rates for subprime mortgage borrowers facing foreclosure will reach about 340,000 homeowners, or about a quarter whose interest rates are slated to rise by mid 2010, according to UBS research.

About 400,000 loans meet the criteria set by industry groups, but many of those will have slipped too far into arrears by the time the rate reset to qualify, Tom Zimmerman, analyst at UBS, said on a conference call.

"The overall impact of this is going to be marginal, but I think it will help a little bit," Zimmerman said.

The plan announced by President George W. Bush on Thursday is aimed at slowing the rate of foreclosures that are worsening the housing slump and threatening to tip the U.S. economy into recession. It would streamline so-called loan modifications already underway by major lenders by applying criteria that, if met, puts a loan on a "fast track" and freezes the rate.

Among standards, the loan must have been originated between January 1, 2005 and July 31, 2007 when underwriting standards were at their worst. They must also have been made for at least 97 percent the value of the home, and the borrower cannot be more than 30 days delinquent.

The plan was developed with the American Securitization Forum -- an industry group that includes lenders, Wall Street dealers and investors.

Many of the borrowers may have been helped independently of the program, so it's difficult to pinpoint the actual impact, Zimmerman said.

(Reporting by Al Yoon; Editing by Diane Craft)