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Obama Announces $75 Billion Mortgage Relief Plan

The U.S. housing industry, where experts believe the economic crisis began, is the target of President Barack Obama's latest initiative to strengthen the economy. Mr. Obama has unveiled a $75 billion plan to prevent as many as nine million Americans from losing their homes.

President Obama made the announcement in the southwestern city of Phoenix, Arizona, one of the areas hardest hit by foreclosures.

"In the end, all of us are paying a price for this home mortgage crisis," he said. "And all of us will pay an even steeper price if we allow this crisis to continue to deepen, a crisis which is unraveling homeownership, the middle class, and the American Dream itself."

Mr. Obama introduced his housing plan one day after signing a $787 billion economic stimulus package, which he says will create or save 3.5 million jobs over two years. He said the home mortgage crisis, the financial crisis and the broader economic crisis are interconnected.

Phoenix-area homeowner Tammy Woods agrees that mortgage problems can affect an entire community.

"This is not just my problem, because if I lose my home, it affects my neighbors, it affects my neighborhood, it definitely affects all of us," said Woods.

Moody's says nearly 27 percent of America's 52 million homeowners with a home loan owe more on their mortgages than their homes are worth. The president's plan is aimed at helping borrowers in that predicament, and those who are in danger of foreclosure.

"But it will give millions of families resigned to financial ruin a chance to rebuild. It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy," the report said. "And by bringing down the foreclosure rate, it will help to shore up housing prices for everyone."

Also, the Treasury Department says it will double the size of its payments to the mortgage finance companies Fannie Mae and Freddie Mac, which the government seized last fall. The government says it will absorb as much as $200 billion in losses at each company.

The Commerce Department reported on Wednesday that construction of new homes and applications for permits to build homes plunged to record lows in January.