More than 3 million owners have lost their homes during the past three years, and almost 5 million more could follow this year through 2011, according to Moody’s Economy.com.

The Obama administration promises to help homeowners who are struggling financially to keep their home with the new $75 billion housing rescue plan.

“The American dream is being tested by a home mortgage crisis that not only threatens the stability of our economy, but also the stability of families and neighbourhoods,” Obama said.

“All of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to deepen.”

The key elements of the Homeowner Affordability and Stability Plan

1) Refinance 4-5 million homeowners into cheaper mortgages
2) Govenrment aid to keep 3-4 million homeowners out of foreclosure
3) Doubling the commitment to Fannie Mae and Freddie Mac to $400 billion

The highlight of the Homeowner Affordability and Stability Plan is a $75 billion program to encourage lenders to cut monthly mortgage payments for borrowers at risk of default, specifically to no more than 31 percent of their income. The administration said it could help as many as 4 million struggling owners stay in their homes.

The plan also doubles the backing to government mortgage companies Fannie Mae and Freddie Mac to $200 billion each.

Foreclosure proposal lets judges modify mortgages

A key provision in President Obama’s $75 billion foreclosure prevention plan would allow bankruptcy judges to modify home mortgages � a measure supported by bankruptcy attorneys and consumer groups but opposed by lenders.

The American Bankers Association has argued that allowing bankruptcy judges to change the terms of mortgages will increase the risks of mortgage lending at a time the market is already struggling.

Still not sure what it’s all about? Read the Foreclosure plan questions & answers爋n Freep.com and the blog post on The White House blog.

Image by respres爑nder Creative Commons.