The plan, which is more ambitious than expected, would spend $75 billion to help keep as many as four million families in their homes, and would help as many as five million more refinance their mortgages to take advantage of lower interest rates.
“The plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too,” the White House said in a fact sheet.
Mr. Obama is set to detail the plan later Wednesday at a high school in Phoenix, a city emblematic of housing’s boom and bust in the last nine years. The administration laid out the proposal as a new report offered more evidence that the housing market remained caught in a free-fall. New-home construction fell to its lowest level on record in January, the Commerce Department reported, amid falling demand, tightened credit markets and a flood of foreclosure properties. Privately owned housing starts in January fell 16.8 percent from December, to an annual rate of 466,000. That was their lowest pace since at least 1959.
The administration’s initiative, called the Homeowner Affordability and Stability Plan, is an effort to slow the decline in the housing market. As the economy drops deeper into a recession, home values are falling faster and faster, and more Americans are losing their houses to foreclosures or distressed sales.
The plan would allow four million to five million homeowners refinance mortgages guaranteed by the government-controlled housing giants Freddie Mac and Fannie Mae. The administration said allowing people to refinance at lower mortgage rates would reduce monthly payments and save families thousands of dollars every year.