The initial effects of President Obama's massive housing rescue plan will be felt as early as next month, one of the president's top economic advisers predicted today.
The president's $275 billion bailout of struggling homeowners takes effect March 4 and is projected to help between 7 million and 9 million Americans stay in their homes and lower mortgage rates.
Sheila Bair, chairman of the Federal Deposit Insurance Corp., told "Good Morning America" today that it would take some time to screen candidates, verify their incomes and provide financial counseling to some applicants.
Nevertheless, she suggested the impact of the program would be almost immediate.
"I believe you'll start seeing a real impact in March, with meaningful, long-term sustainable progress," Bair told "GMA."
The FDIC chairwoman noted that the Case-Schiller Home Price Index is predicting a further 15 percent reduction in home values between now and the end of 2010, but she said the declines "will be tempered by the new program."
Bair also said that the huge expenditure won't halt an avalanche of foreclosures, conceding that there are millions of homeowners who are now so far "underwater" -- their homes now worth less than their mortgages -- that they will inevitably lose their homes.
But Obama's plan will "at least help 3 million to 4 million of those borrowers in distress," she said.
"This should have a significant reduction in the foreclosure rate ... decreasing unnecessary foreclosures, which are putting downward pressure on home prices which are hurting everybody."
Bruce Marks, CEO of the Neighborhood Assistance Corporation of America, scoffed at Bair's claim.
"She is absolutely wrong. It will have minimal impact," Marks told ABCNews.com.
"They have pulled from the sky the 4 to 5 million mortgages that will be affected. It's just hype," he said.
Marks said the program will have minimial impact that soon because "they haven't even agreed to underwriting criteria."
Speaking from the Mortgage Bankers Association meeting in Tampa, Fla., Marks said that negotiations on how the plan will work are still being hammered out, and some of the details are leaving desperate homeowners out in the cold. For example, he said that currently the refinancing portion of the plan would only apply to people who are at least 90 days in arrears in their mortgage payments, and exclude those who may be 60 or 40 days late.
"You have two individuals in President Obama who has established a lot of credibility and Sheila Bair who has a lot of credibilty with the American people are both putting their credibility on the line for a program that will have minimum impact on the foreclosure crisis," he said.
Obama's plan, unveiled in a suburb of the mortgage-strapped city of Phoenix, targets two groups of homeowners who have been hurt by the mortgage crisis.
First, some 4 million to 5 million families who have seen their home values drop but are not at risk of foreclosure, would now be able to refinance into new lower-rate mortgages.
The other group, 3 million to 4 million homeowners with adjustable-rate mortgages, would be able to have their loans temporarily modified to a lower interest rate for at least five years.