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).
- 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.