Following are the key points from the president’s recently announced $275 billion housing plan (the Homeowner Affordability and Stability Plan).  This information was compiled from a recently published synopsis by the National Association of Realtors, another from the California Association of Realtors  and from  information recently provided by Terry Bleecker of Golden Empire Mortgage.  

Keep in mind that until all the details are ironed out and any required legislation is passed, it will be difficult to ascertain the impact this will have on the housing market.

1. Foreclosure Prevention (targeted for about 4 million homeowners): 
1. Participating lenders will receive federal subsidies to aid struggling homeowners via loan mods.  Seventy-five billion has been allocated for this purpose.  The lenders will be responsible to reduce interest rates necessary to bring down the ratio of the mortgage to the borrowers’ pre-tax income down to 38%.  Then the lenders will receive a match from the federal government to bring the ratio further down to 31%. 
2. In some cases the lenders can get an additional matching subsidy if debt reduction is needed to meet these ratios.  
3. The government will compensate servicers by $500 and lenders by $1,500 for each successful modification.
4. Borrowers will be eligible to receive $1,000 to stay current on their mortgage.
2. Homeowners who are current on their loans may refinance as conforming loans (i. e. eligible for Fannie May or Freedie Mac) although they do not have 20% equity. 
1. The program allows them to refinance  up to 105% of the current value of the home.
2. This program only applies to primary residences – no investment properties are eligible.
3. Treasury will increase its commitment to Freddie Mac and Fannie May, the so called Government Sponsored Entities (GSE’s).
1. Treasury will purchase $200 billion of preferred stock each in Fannie Mae and Freddie Mac rather than the previous commitment of $100 billion for both.  
2. It explicitly backs the GSE’s mortgage backed securities by $400 billion, twice the previous amount. 
3. Treasury will purchase an additional $100 billion in mortgage backed securities from the GSE’s bringing the total up to $900 billion).
4. Renters displaced by foreclosure of their landlord’s property will receive some federal assistance
5. A pool of $2 billion will be allocated to stabilize neighborhoods experiencing high levels of foreclosures.
6. Another housing bill will contain a bankruptcy “cram down” provision empowering judges to order changes in mortgage terms, balances and interest rates.