(Feb. 18, 2009) Reporting from Washington — President Obama, announcing a $75-billion federal aid plan today for millions of homeowners facing mortgage foreclosures, is expected to say that the nation is facing "a crisis unlike any we've ever known."

Obama will appear in Mesa, Ariz., near Phoenix, to announce the Treasury Department's plans to direct some of the $700-billion in financial market bailout funds that Congress approved earlier this winter toward efforts to stem the foreclosure crisis.

"The American dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of families and neighborhoods," Obama plans to say.

"It is a crisis that strikes at the heart of the middle class: the homes in which we invest our savings, build our lives, raise our families and plant roots in our communities," the president's prepared remarks state.

Obama, citing conversations he has had with homeowners in crisis "along the rope lines" of the campaign trail and during his presidency, and in letters and e-mails that he has received, plans to say that "their hardship and heartbreak are a reminder that while this crisis is vast, it begins just one house -- and one family -- at a time."

Nearly 6 million Americans are in foreclosure or at risk of foreclosure, the White House says, including about 150,000 in Arizona.

"The effects of this crisis have also reverberated across the financial markets," Obama plans to say, according to the remarks released by the White House. "When the housing market collapsed, so did the availability of credit on which our economy depends. As that credit has dried up, it has been harder for families to find affordable loans to purchase a car or pay tuition and harder for businesses to secure the capital they need to expand and create jobs.

"In the end, all of us are paying a price for this home mortgage crisis," he will say. "And all of us will pay an even steeper price if we allow this crisis to deepen -- a crisis which is unraveling homeownership, the middle class and the American dream itself. But if we act boldly and swiftly to arrest this downward spiral, every American will benefit."

The president's plan will provide for the refinancing of home loans for "millions of families in traditional mortgages who are underwater or close to it."

It will modify loans for those "stuck" in subprime mortgages that they can't afford because of soaring interest rates or "personal misfortune." And with federal subsidies, it will enable banks to lower interest rates for many.

The plan will assist 7 million to 9 million families in restructuring or refinancing their mortgages to avert foreclosure, the White House says.

"It will not help speculators who took risky bets on a rising market and bought homes not to live in but to sell," Obama plans to say. "It will not help dishonest lenders who acted irresponsibility, distorting the facts and dismissing the fine print at the expense of buyers who didn't know better. And it will not reward folks who bought homes they knew from the beginning they would never be able to afford. In short, this plan will not save every home."

The plan will enable Fannie Mae and Freddie Mac, the institutions that guarantee home loans for millions, to refinance mortgages valued at more than 80% of the homes' values. The Treasury plans to provide as much as $200 billion in capital to ensure that Fannie Mae and Freddie Mac can stabilize markets and hold loan rates down.

The Treasury will provide incentives for lenders to work with borrowers to modify the terms of subprime loans at risk of default and foreclosure. Although these loans account for only 12% of all mortgages, the White House says, they account for about half of the nation's mortgage foreclosures.

And the plan sets guidelines for the mortgage industry that will encourage lenders to modify mortgages on primary residences. Any institution seeking financial aid from the government and to modify home mortgages will have to do so according to guidelines that will be put in place in two weeks.

"There will be a cost associated with this plan," Obama plans to say. "But by making these investments in foreclosure prevention today, we will save ourselves the costs of foreclosure tomorrow. . . . Given the magnitude of these costs, it is a price well worth paying."