President Barack Obama on Wednesday pledged up to $275 billion to help stem a wave of home foreclosures that sparked the U.S. financial meltdown, the next phase in a multi-pronged effort to lift the country out of recession.
Obama's strategy has three main components.
- a $75 billion fund would subsidize homeowners struggling to pay their mortgages.
- housing finance companies Fannie Mae and Freddie Mac may invest a further $100 billion in mortgages to mop up more home loans and spur fresh lending.
- Washington may inject a further $100 billion into each of the mortgage giants, protecting them against losses as they expand their massive reach into the housing market.
Aware of critics who might charge that it would help people who took on far more debt than they should have, Obama said his plan was aimed at "rescuing families who have played by the rules and acted responsibly," refinancing traditional mortgages for up 5 million homeowners who now are close to owing more than their homes are worth.
It will also establish a $75 billion fund to reduce monthly payments for another 3 million to 4 million homeowners "stuck in sub-prime mortgages they can't afford as a result of skyrocketing interest rates or personal misfortune," he said.
And that leads to our Fast Money Reader Poll. Do you agree with Obama's plan to bailout homeowners facing foreclosure?
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CNBC.com with wires