The key elements of this plan are:
1. Incentives would be given to mortgage lenders who will modify loans to reduce mortgage payments and provide help to up to 4 million homeowners having difficulty making payments.
2. Fannie Mae and Freddie Mac would be allowed to refinance mortgages they own or guarantee. This could be done even if the homeowner owes more on the home than it is worth.
3. Mortgage rates would be kept low for all buyers. This would be done by providing more support to Fannie and Freddie Mac.
This plan will be funded with money that comes directly from the $700 billion financial industry bailout. This plan was designed to help homeowners facing foreclosures, by giving them the opportunity to restructure or refinance their mortgages.
It might seem that this plan is only going to help people who are defaulting on their mortgages, but defaults and foreclosures continue to bring down the market and this results in lower home prices for all of us. Almost everyday, I hear, “When will home prices go up?” In my opinion they will go up as soon as we can get all of these foreclosed homes off the market.