Journal-News.com

Springfield, Ohio — Details of the mortgage relief plan that President Barack Obama unveiled in a speech on Wednesday, Feb. 18, are just starting to sink in for players in the local housing market.

The administration's goals are to help as many as 9 million families restructure or refinance their mortgages and shore up housing prices by lowering the national foreclosure rate, Obama said in Mesa, Ariz. Among the proposed reform measures is a plan to use subsidies to persuade lenders to modify the terms of existing mortgages.

The president also proposed altering laws so that bankruptcy judges may reduce home mortgages on primary residences to their fair market value.

Tina Koumoutsos, executive director of the Neighborhood Housing Partnership, said she was heartened by the fact — revealed in the president's speech — that not just delinquent borrowers would get help.

Her group has heard from homeowners who say they owe more than their homes are worth or that lenders won't work with them until they are delinquent on their payments.

"Lenders were creating a huge problem by not trying to be proactive and working on modifications," Koumoutsos said. "We're encouraged that this plan takes into account the real world."

In his speech, Obama stressed that lenders and buyers must work together, saying if lenders reduce payments to no more than 31 percent of a borrower's income, federal money will "make up part of the gap between what the old payments were and what the new payments will be."

Reporters Samantha Sommers and Elaine Roberts contributed to this story.