Nationally, about 10 million borrowers fall into this "underwater" category, he said.
To pay for the program, financial institutions would be charged what the president said was a "small fee," which would require congressional approval. The program's cost is $5 billion to $10 billion, Housing and Urban Development Secretary Shaun Donovan said Wednesday.
At a news conference in Washington before Obama spoke, House Speaker John A. Boehner (R., Ohio) said the plan was the latest in a series that has delayed efforts to clear the market of foreclosures, which is necessary before home prices can begin to recover.
"None of these programs have worked," Boehner said of the administration's efforts thus far, which began in February 2009.
The comment was interpreted as a sign that getting Congress to approve Obama's plan would not be easy. Two years ago, when Congress was in Democratic hands, a similar request to charge lenders fees was defeated.
Even the president acknowledged at his news conference that "these programs have not worked as we had hoped."
Obama outlined key aspects of the new proposal, some parts of which require action by Congress, while others are administrative changes that could be made without congressional approval:
Borrowers current on their mortgage payments would be able to refinance, saving an average of $3,000 a year. The president said he hoped the savings would be used to pay down loans and boost borrowers' equity in their houses - in effect, principal reduction. If they agreed to do so, Donovan said, origination fees would be reduced.
The refinancing process would be streamlined for borrowers with loans held by Fannie Mae and Freddie Mac. Those with loans held by other entities would refinance through the FHA.
