(March 4, 2009) Reporting from Washington — The Obama administration today released details of its $75-billion plan to stabilize the housing market by helping as many as 9 million homeowners refinance or modify their mortgages.

"Two weeks ago, the president laid out a clear path forward to helping up to 9 million families restructure or refinance their mortgages to a payment that is affordable now and into the future," Treasury Secretary Tim Geithner said in a news release. "Today, we are providing servicers with the details they need to begin helping eligible borrowers."

The administration's "Making Home Affordable" housing plan has two main parts -- one aimed at prudent homeowners who would like to refinance into a lower rate, and another aimed at struggling homeowners seeking a way to lower burdensome monthly mortgage payments.

Details of the eligibility requirements for both programs have been posted on the government's economic recovery website: www.financialstability.gov.

The first program, called "Home Affordable Refinance," is aimed at homeowners whose homes have lost value as housing prices have plummeted. It would permit them to refinance their current mortgage even if there is little or no equity left in their homes. Borrowers with "conforming" loans backed by mortgage giants Fannie Mae and Freddie Mac would be able to refinance even if they no longer have 20% equity in their homes. Many homeowners may not even need a new appraisal to qualify for a refinanced mortgage.

Under the program for struggling borrowers, called "Home Affordable Modification," the government will provide incentives for lenders to lower mortgage payments for qualified homeowners to 31% of their monthly gross income.

The idea is not to prevent all foreclosures, but to curb those the government deems "unnecessary" -- where modest changes for prudent borrowers could keep more people in their homes and stem the decline of home values in their communities.

The two programs are expected to cost $75 billion, paid for out of the existing $700 billion in bailout funds approved by Congress.

via the LA Times
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