How much foreclosure relief will homeowners get from bailout plan?

How does the bailout plan help homeowners facing foreclosure?

The plan provides the Treasury secretary as much as $700 billion to buy troubled mortgages, and securities tied to these mortgages, that are held by banks and other large investors. When these assets come under government control, federal officials are required to "implement a plan that seeks to maximize assistance for homeowners" and use their authority to minimize foreclosures.

Does that differ from what the government and lenders are already doing?

Federal officials have already been encouraging lenders to modify loan terms whenever possible. Mortgage industry experts say most lenders are willing to make modest changes to payment plans to avoid the time and expense of foreclosure but are reluctant to do so if they determine that the borrower lacks the income to make even modified payments or if their losses would be too great.

It sounds as if the plan doesn't do much more for troubled homeowners then.

There are different opinions on that. Steven Adamske, spokesman for the House Financial Services Committee, believes that the government -- by becoming an investor in mortgage-backed securities -- will have new clout to demand that loan servicers modify mortgages. "If servicers are an impediment [to loan workouts] we can take another look at the industry next year and see if there are other actions we can take to remove roadblocks," he said.

Unlike a private investor or lender, "the government is here to help. We want to rebuild neighborhoods from the ground up," Adamske said.

But Paul Leonard, California director of the Center for Responsible Lending, a nonprofit advocacy group, thinks the measure really won't help many homeowners. He believes the only way to ensure people stay in their homes is to allow bankruptcy judges to modify or forgive loan terms in bankruptcy cases, which he said could have prevented 600,000 foreclosures. Such a measure has been opposed by mortgage lenders, who say it would discourage banks from making loans.

How many people are currently facing foreclosure?

Nearly 2 million mortgages are delinquent by 60 days or more, putting them at risk of foreclosure. Industry experts say there have been more than 900,000 foreclosures since 2007.