The multipronged fix will enable banks and loaning institutions to help as many 4 million struggling borrowers by modifying loans so monthly payments are no more than 31 percent of monthly gross income. Also, homeowners who haven't missed a payment can refinance into lower-cost loans even if they have little or no equity. This is expected to help up to 5 million homeowners.
To spur the loan modifications, the $75 billion loan plan will provide incentives to borrowers, loan servicers and investors. The government will also subsidize interest rate reductions to get borrowers to affordable monthly payments.
Source: CNNMoney.com, Obama Foreclosure Fix Open for Business