Details on housing plan show U.S. taking aggressive action

Details of the Obama administration's housing rescue plan were greeted with both praise as a means to help homeowners who are at risk of foreclosure and criticism that more needs to be done to make homes more affordable for new and current homeowners.

"They're fleshing out the details, and the meat of the program is the modification program," says Brian Bethune, with IHS Global Insight. "It makes sense, and the more they can show what they're going to do and execute it, the better off we'll be. There are potentially millions of owners who could be eligible."

But some say the details don't do enough to subsidize interest rates to lower costs for potential and current homeowners.

"We would have liked to see more on subsidizing interest rates for those who want to refinance or buy a home," says Lawrence Yun, chief economist with the National Association of Realtors.

Economists say no single program will turn around the housing crisis, but Obama's plan and ensuing details show the federal government is taking an aggressive approach — reaching out even to homeowners who are not yet behind on their monthly mortgage payments.

Concerns still remain, including tight credit that has made it hard for potential buyers to enter the marketplace, and the time it may take to accomplish mortgage modifications and refinancing under the Obama plan.

"This is going to take time," Bethune says.

The $75 billion for the housing plan comes from an existing $400 billion in bailout funds approved last fall by Congress. The announcement Wednesday of the plan's details, which are expected to jump-start mortgage modifications and refinancing, comes at a critical time as the housing market limps along on life support.

Other challenges include the rising jobless rate, with more families falling into foreclosure. The Obama plan also is voluntary in nature, meaning it relies on servicers to participate.

Obama's plan isn't geared toward halting foreclosures. Rather, it focuses on preventing those that could be avoidable by tweaking at-risk mortgages.

Some are excluded. For refinancing, only loans held or guaranteed by Freddie Mac or Fannie Mae are eligible for refinancing. Speculators who buy homes to flip them for profit also are not included in the federal rescue plan.

"Clearly, the administration has put some meat on the bones here. There's a real chance this could have a dramatic impact on the foreclosure problem," says John Taylor, CEO and president of the National Community Reinvestment Coalition. "To work, it has to have the (loan servicing) industry collaborate, and we're hoping that will happen."