President Obama Announces Homeowner Affordability and Stability Plan

On February 18, President Obama announced his Homeowner Affordability and Stability Plan designed to help 7 to 9 million families avoid foreclosure by refinancing or modifying their mortgages.  The plan also strengthens the federal commitment to Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs).

Here are the key elements of the Obama plan:

• Refinancing by the GSEs of loans that they own or guarantee.  The GSEs will work with their loan servicers to develop a streamlined refinancing program for borrowers with loan-to-value ratios (LTVs) above 80 percent who now face difficulty refinancing. 

• A $75 billion Homeowner Stability Initiative—with lender, servicer, investor, and borrower incentives to make it work.  The program is limited to loans at or below the GSE conforming loan limits.
  

• More support for the GSEs, including doubling of potential Treasury investment from $100 billion to $200 billion for each GSE, to maintain their positive net worth.  The plan also raises the cap on mortgages that the GSEs may hold in their portfolios by $50 billion to $900 billion.