obama actually announced this months ago. The problem is the banks said “Not gonna’ do it”. The only way this can work is if the government pays the banks the difference. And that may be the plan.
And, EVERYONE who is current would qualify. There will be no appraisal, no income verification, etc. So if you want the government (taxpayers) to pay off some of your mortgage, go for it.
So those who are NOT current, I would imagine, facing foreclosure, would have their homes devalued further by virtue of lowered demand? Demand would be lowered because it would be more attractive to stay where you are than consider buying another house. If this happened, then the bank would lose even more on the foreclosures (those who are not current) when they occurred.
These loans I'm sure would not be assumable, so real estate sales and construction would be harmed immensely.