Will the housing plan do enough to help Californians?

While real-estate professionals applauded the refinance provisions, which the White House says could help four million to five million homeowners, lots of borrowers wouldn’t be eligible. For example, the refinance provision is limited to borrowers whose mortgages are owned or securitized by Fannie Mae or Freddie Mac, the government-backed mortgage companies. That essentially shuts out wealthy borrowers who would like to refinance but can’t because they own expensive homes financed with so-called jumbo mortgages, which are too large to be owned by Fannie Mae and Freddie Mac. ... Congress has endorsed a provision that would allow bankruptcy judges to modify all types of loans. The White House’s proposal would limit such write-downs to existing mortgages under Fannie Mae and Freddie Mac loan limits. Some borrowers in hard-hit markets say they also are excluded. That is because the foreclosure-mitigation plan allows borrowers with little or no equity to refinance a first mortgage for up to 105% of the property’s current market value. For some affluent borrowers heavily underwater in markets like California, that isn’t enough. ‘We can afford to make our payments, so no one is going to help us,’ said Jill Wong, who has watched the value of her Modesto, Calif., home drop to around $350,000, from the $605,000 she paid four years ago. That wiped out her 20% down payment and has left her with a mortgage that has a 125% loan-to-value ratio. Ms. Wong said she is considering walking away from her current residence because she doesn’t expect that the home will ever recover its value. ‘What’s to stop me?’ she asked. ‘Years ago, you would have thought it was immoral.’ The housing measures have also upset a range of homeowners who say they shouldn’t have to subsidize those who bought more than they could afford. ‘We’ve lived a conservative life,’ said Tim O’Brien, 61, a retired CPA from Los Angeles. ‘We’ve paid our house off and saved our money, so you kind of find yourself on this issue not agreeing with everything.’