Also, the low teaser rate on a subprime loan allows the buyer to borrow more, helping to boost sales prices and commissions.

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The plan allows those borrowers who took out subprime mortgages between Jan. 1, 2005, and July 31, 2007, to pursue one of the following options: refinance to a new mortgage, switch to loan insured by the FHA, or freeze their "teaser" rate for five years.

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Subprime borrowers were attracted by teaser loans, which offered low interest rates in the first two years, jumping sharply over the rest of the loan.

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