What say you? *The plan would allow mortgage financing companies Fannie Mae and Freddie Mac, both taken over by the government last year, to refinance mortgages they own or have guaranteed even if more is owed on a home than the home is worth. In the past, borrowers who owed more than 80 percent of a home"s value were unable to refinance under Fannie and Freddie rules. The new guidelines would allow homeowners to refinance into loans of up to 105 percent of a home"s value, providing help for people whose property values have declined in the recession. *The White House says this could reduce monthly payments for up to 5 million homeowners. *The plan only applies to people who have a mortgage backed by Fannie or Freddie; many Bay Area homeowners have so-called "nonconforming" loans not backed by Fannie and Freddie that will not qualify for this refinance provision. *Applies to borrowers current on their payments for loans on primary residences. *For example: A homeowner has a $420,000 loan on a home now worth $400,000. If the loan could be refinanced from a 6.5 percent rate to a 5.25 percent rate, the payment would drop by about $430 a month. *If lenders agree to reduce rates or principal balances to levels borrowers can afford, the government will take on part of the loss incurred by lenders. Participating lenders will be required to cut rates or principal enough that the monthly mortgage payment is no more than 31 percent of a borrower"s income. *The government will also make incentive payments to lenders for modifying mortgages, and offer principal reduction of up to $5,000 to borrowers who keep current on their payments. *Up to 4 million homeowners could benefit, and the plan is projected to cost $75 billion. *For example: Homeowners whose mortgage balance is now 120 percent of the value of the home have monthly payments of $2,600, equal to 40 percent of their income of $6,500 a month. The participating mortgage servicer reduces the payments to 31 percent of income, or $2,015 monthly. The government absorbs half the cost of getting the homeowners" payments to 31 percent from 38 percent. The lender absorbs whatever loss it took to get the borrowers to a 38 percent debt-to-income ratio. *Using money already approved by Congress for this purpose, the Treasury Department and the Federal Reserve will continue to buy Fannie and Freddie mortgage-backed securities to maintain stability and liquidity in the marketplace. The department will provide up to $200 billion in capital. *The administration will work to change bankruptcy rules so judges can reduce mortgages on primary homes to their fair market value, as long as the borrower sticks to a court-ordered repayment plan. *As part of the $787 billion stimulus package that President Barack Obama signed into law Tuesday, the administration will award $2 billion in competitive grants to communities experimenting with innovative ways to prevent foreclosures.