Obama Plan for Housing Flawed, Critics Say

Updated from Wednesday, Feb. 18

Critics across the housing and banking industries say the Obama administration's plan to spend up to $275 billion to aid homeowners at risk of foreclosure may be more difficult than imagined and help fewer homeowners than it sets out to assist.

The multi-faceted Obama plan outlined on Wednesday, called the Homeowner Affordability and Stability Plan, is intended to modify as many as nine million existing mortgages that homeowners cannot afford, or whose value exceeds that of the home.

One component of the plan will spend $75 billion to reduce monthly mortgage payments for 3 million to 4 million "responsible," but at-risk homeowners by matching lender reductions dollar-for-dollar. It will also provide other incentives to keep loans current and to rework mortgages instead of foreclosing. ...