Ins and outs of new housing plan

On Wednesday, President Obama unveiled his administration's $75 billion plan to stem the growing tide of foreclosures in America. The plan aims to help up to nine million Americans who are struggling to meet their monthly mortgage payments even while their home values plummet.

The Bush administration drew criticism for relying on lenders and servicers to voluntarily modify the terms of troubled mortgages… a tactic with less-than-stellar results.

Obama has taken a broader approach to the foreclosure problem, looking to help not only those who are defaulting on payments, but also those who are at risk of falling behind in the near future. Let's take a look at some of the specific most interesting measures in the plan designed to tackle this overwhelming problem.

1) The plan includes billions of dollars of incentives for servicers to modify their loans.One important point here, the changing of loan terms is still voluntary for servicers. Even so, the incentives are designed to be too good to pass up: for each modification, the servicers receive $1,000, plus another $1,000 per  year for three years if the borrower stays current. On top of that, the government will give $500 to servicers and $1,500 for mortgage holders if they modify at-risk loans before the borrower falls behind.

2) The plan aims to help homeowners who owe more than their houses are worth. That's a state known as "underwater." And right now, a lot of homeowners are drowning. According to Zillow.com, home prices have fallen 17.5 percent nationwide, back to levels of the fall of 2004. The plan is to assist borrowers who owe more than 80 percent of their home's value to refinance and reduce their monthly payment and the new mortgage cannot be more than 105 percent of the current market value of the home. So you may still be underwater… but you’ll be a heck of a lot closer to the surface.

3) Obama plans to work with Congress to change bankruptcy laws to allow judges to modify mortgages during bankruptcy.Judges could then reduce the loan balance, which would decrease the value of the mortgage. That scares investors and servicers, and would encourage them to modify mortgages themselves before they ended up in bankruptcy court.

These are just a few of the major provisions in President Obama's very complex plan. In the end, the administration is hoping to bring payments down to 31 percent of a borrower's income, which is considered the threshold of affordability. It's an ambitious goal given how deep in the hole many borrowers now are. Plus, most indicators say the housing market is going to be bad for a while: housing starts and applications for building permits - a good indicator of future construction activities - both hit all time lows in January.

Ali Velshi is CNN's chief business correspondent