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"That's a loss for mortgage holders but it's a smaller loss than would come from foreclosure," he said. "That's why these modifications are in the interest of both borrowers and lenders.
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" US President George W. Bush, who Thursday unveiled the measures agreed upon by lenders and investors, said the plan could help up to 1.
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2 million distressed homeowners at risk of foreclosure.
The plan devised by US Treasury officials with major lenders and investors would help struggling homeowners refinance subprime adjustable-rate home loans or freeze the current interest rates for five years.
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Subprime loans were doled out to Americans with patchy credit during the housing boom which ran out of steam in early 2006.
The program was unveiled amid fears that a rising tide of home-loan defaults could have a cascading economic impact.
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"There is a clear collective interest in arresting a vicious downward spiral which has been gaining momentum in recent months," said economist Brian Bethune at the research