Obama Mortgage Relief Plan
Reuters just posted a preview of the plan to be delivered later today:
Obama mortgage plan to aid up to 9 million families
Wed Feb 18, 2009 9:52am EST
WASHINGTON (Reuters) President Barack Obama’s much-anticipated plan to deal with the U.S. housing crisis aims to help as many as 9 million families avoid foreclosure on their homes, one of the root causes of the global financial meltdown.
“The plan not only helps responsible homeowners on the verge of defaulting but prevents neighborhoods and communities from being pulled over the edge too,” according to a summary of the plan that Obama is due to formally unveil at 12:15 p.m. EST in Mesa, Arizona.
It aims to help 4 million to 5 million “responsible homeowners” to refinance and another 3 million to 4 million homeowners by lowering the risk of imminent default with a $75 billion “homeowner stability initiative” that will help to reduce their monthly payments.
The Obama administration’s summary said the plan could offer a buffer of up to $6,000 against value declines on the average home.
The plan also aims to increase confidence in mortgage giants Fannie Mae and Freddie Mac through Treasury funding to “ensure the strength and security of the mortgage market and to help maintain mortgage affordability,” the plan summary said.
“This initiative is intended to reach millions of responsible homeowners who are struggling to afford their mortgage payments because of the current recession, yet cannot sell their homes because prices have fallen so significantly,” the summary said.
As part of the housing rescue plan, the Treasury Department will double its financial support for housing finance giants Fannie Mae and Freddie Mac to allow them to play a bigger role supporting housing as part of a fresh foreclosure mitigation plan.
The Treasury said it was increasing its preferred stock purchase agreements with the two government-controlled companies to $200 billion each from $100 billion.
It also said it was raising the limit on the size of the mortgage portfolios the two companies can hold by $50 billion to $900 billion each, along with a corresponding increase in their allowable debt outstanding.
(Editing by Bill Trott)