Housing and finance-related stocks and exchange traded funds (ETFs) are downright depressing, and the talk of the "teaser freezer" isn’t shedding much light on the situation. The emerging Bush-administration-backed plan is in the works, but many economists say the plan isn’t enough to quell concerns facing a recession and the pain of escalating foreclosures and defaults.

Alan Zibel for Associated Press reports that as it stands, the loan servicers are being asked, but not forced, to give two to five year extensions for subprime mortgages made to borrowers with weak credit that are due to reset in the coming years. If lenders temporarily freeze low introductory interest rates on home loans made to risky buyers before they take off, it may hardly make a dent in the foreclosure problems facing the economy.

The freezes are only for borrowers who are on time with their payments but will be unable to afford their monthly payments once the rate resets. The Federal Deposit Insurance Corp. estimates around 1.1 million are in that situation. Around 400,000 borrowers are already late on payments and will not qualify for a freeze. They may have no other alternative than foreclosure.

An insider points out that the mortgage may not be the problem, that it was simply homebuyers paying far too much for their homes and are now facing the consequences. Some ETFs that may be affected and their year-to-date performance:

• SPDR S&P Homebuilders (XHB) - down 49.8%
• iShares Dow Jones U.S. Real Estate (IYR) – down 17.1%
• Vanguard Financials ETF (VFH) – down 14.3%

Tags: Financial, Homebuilders, Real Estate