While the Bush Administration's plan to freeze interest rates on subprime ARMs generated talk of potential investor litigation, its expected limited impact could eliminate the possibility of a moral hazard, sources say.

It is too early, of course, to gauge the full effect of Treasury Secretary Henry Paulson's rate freeze plan. But analysts said that limits to loan modifications were not only built into Paulson's plan, but also within the mortgage servicer's own contract.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.