WASHINGTON, Dec 17 (Reuters) - A program unveiled by U.S. President George W. Bush in August that is trying to save tens of thousands of homeowners from foreclosure has aided just 266 borrowers so far, according to government data released on Monday.

The initiative, which helps high-risk or low-income borrowers win better loan terms by insuring mortgage payments, targets recent homeowners whose loans have a built-in interest-rate spike that made them miss a payment.

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So it was that Henry Paulson came up with an idea… the ‘teaser freezer‘ plan. The ARM teaser freezer is being sold to the public as a way to protect homeowners. But it has another purpose, says a reporter from the San Francisco Gate, to help save the banks from their own bad judgment.

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SAN FRANCISCO (MarketWatch) — Securitization, hailed as the greatest financial innovation of the 20th century, isn’t getting such rave reviews anymore after this summer’s subprime mortgage crisis exposed some weaknesses. With global credit markets still in crisis, experts have already begun debating the benefits and the drawbacks of the process.

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Herb Greenberg

Even before this mortgage mess started, one person who kept emailing me over and over saying that this is going to get real bad. He kept saying this was beyond sub-prime, beyond low FICO scores, beyond Alt-A and beyond the imagination of most pundits, politicians and the press. When I asked him why somebody from inside the industry would be so emphatically sounding the siren, he said, “Someobody’s got to warn people.”

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