The mortgage assistance plan is at hand and, as has become the pattern with such programs of late, it is Bigger, Longer and Uncut when compared with the trial balloon proposals that were floating around the rumor mill. Also unsurprisingly, it seems to have found new use for Fannie and Freddie.
The plan will create a new program to help as many as 5 million homeowners refinance conforming loans owned or guaranteed by Fannie Mae and Freddie Mac, according to a fact sheet released by the White House. Treasury will buy up to $200 billion of preferred stock in each of the housing companies, twice as much as previously pledged, the announcement said.
"It will give millions of families resigned to financial ruin a chance to rebuild," Obama said in remarks prepared for delivery at 10:15 a.m. in Phoenix. "By bringing down the foreclosure rate, it will help to shore up housing prices for everyone."
My favorite part is the incentives structure:
Companies that service mortgages will get $1,000 for each loan that's modified, and as much as $1,000 for three years when the borrower stays current, the government said. Homeowners also are eligible for $1,000 annually for five years for remaining current on their loans, according to the plan.
Now, where is Barney Frank to ask homeowners why they have to be "bribed" to stay current?
Obama Sets $75 Billion Plan to Stem U.S. Foreclosures [Bloomberg]
Earlier:We Thought It Was Absurd Too, But It Turns Out That Obama Really IS Going To Pay Your Mortgage