President's Housing Plan Comes Amid Negative Housing Reports.(MBS Report)

Byline: Sally A. Runyan, Thomson Reuters and Karen Sibayan

There are both positive and negative aspects to President Barack Obama's Homeowner Affordability and Stability Plan (HASP) announced on Wednesday last week.

On balance, "the plan is a positive first step in stabilizing the U.S. housing market," according to Westwood Capital.

HASP was designed to help between seven and nine million families restructure or refinance their loans to avoid foreclosure. Of that total, four to five million people will be allowed to refinance their existing Fannie Mae or Freddie Mac mortgages into lower rates, resulting in lower monthly payments.

For the other three to four million at-risk homeowners, the government will fund a $75 billion initiative that encourages loan modifications to bring monthly payments to sustainable levels; gives servicers an upfront fee of $1,000 for each eligible modification made; provides $1,000 a year for five years to reduce the loan's principal balance if the homeowner stays current on his loan; and creates a $10 billion insurance fund designed to help protect …