Who Will Obama’s Foreclosure Plan Bail Out?

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President Obama is set to unveil a new plan today to stem rising foreclosures by empowering the government to renegotiate loan terms to keep people in their homes. The price tag for the measure is expected to be between $50 and $100 billion.

Details remain scarce, but officials are looking to help homeowners who are in danger of defaulting on their mortgages, as well as those already behind, according to sources close to the discussions. Until now, most government and industry efforts have centered only on the delinquent… One likely component will be interest-rate subsidies for at-risk borrowers, with the government matching the servicer’s rate reduction. Borrowers would have to take an affordability test to see whether they could handle the monthly payment on the reworked loan.

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