The plan would allow up to 5 million homeowners who now are close to owing more than their homes are worth to refinance mortgages through Fannie Mae and Freddie Mac. It will also establish a $75 billion fund to reduce monthly payments for another 3 million to 4 million homeowners facing foreclosure. (Read more about the plan here)
Critics charge the plan just bails out people who took on more debt than they could afford. But proponents claim the plan is necessary to stop the deflationary spiral in the housing market that is central to the overall decline in the economy.
More details of the plan are expected in early March, particularly efforts to allow bankruptcy courts to revise mortgage terms.
Other Voices on the Plan ...
More than a million mortgages at JPMorgan will get rewritten under the plan, Dimon said during a CNBC interview in which he also praised other administration initiatives for banks and the broad economy.
"To me the whole package is elegantly done—no simple solution, but what they've done is very good," he said. "And I think if the secretary of the Treasury and President Obama continue to come up with really thoughtful plans and to roll them out like this it will have a very beneficial effect on our psyche, on confidence in the financial system and on the country." (Read more here)
Billionaire investor Wilbur Ross suggested Dimon's comments may have influenced by the federal money Chase is receiving. He also suggest the mortgage plan needed to go farther "in a severe way" in principal reduction if it would have any real effect. (See his full comments here)
David MacEwen of American Century Investments said the president's housing-crisis plan is a start at getting to the root of the problem. A lot of the repackaging of mortgages that has happened so far has done nothing to help individual homeowners. David Resler of Nomura Securities said the hole that needs to be plugged is a lot bigger than the money that's been appropriated to plug it, so the question is, "Who do you pick?" Also, the track record of those who have been helped in the past is not good; many very quickly go back into default. (See his interview here)