New Mortgage Rescue Plan Expected Wednesday from President Obama

Curiously absent from the enormous economic stimulus plan, expected to be signed by President Obama today, was additional aid for a mortgage and housing market that continues to falter. However, shortly after that legislation cleared the Senate hurdles the Obama administration was talking about another rescue package.

Treasury Secretary Timothy Geithner unveiled an unimpressive plan for the $350 billion remaining in the TARP fund. A plan that was deemed unimaginative and vague by most, and the market immediate responded as such--running down hill ever since. That likely spawned the "but, wait there's more" announcement late last week, revealing a more specific plan to directly aid homeowners.

Although there have been nearly a dozen ideas bantered about in the press the most likely candidates are:

Additional attempts to lower overall lending rates by purchasing as much as $600 billion in mortgage-backed securities and debt from Fannie Mae and Freddie Mac.

Execute on President Obama's statement to commitment $50 billion or more to prevent foreclosures. The new wrinkle is that there may be provisions to assist current paying borrowers who's homes are "underwater" because of dramatically falling home prices.

Standardize loan modification guidelines in such a way as to bring some stability and order to foreclosure mitigation processes.

The key themes seem to be making mortgages more affordable, by forcing down rates or even principle reductions. Unfortunately, the contagion effects of this crisis have now made this crisis a multi-headed monster. Lowering mortgage rates, doesn't solve a lack of home equity to refinance, which doesn't allow the refinancing ofresetting ARM payments, and certainly does provide payments for those that have lost their jobs.

The market and homeowners eagerly hope for a smart and creative solution. Until then big banks like Bank of America, Citigroup, and JP Morgan have put their foreclosures on hold.