Will Obama's latest mortgage refinance plan help you?

President Barack Obama says goodbye to homeowner Lissette Bonilla after visiting with her family in Las Vegas, Monday, Oct. 24, 2011. Obama is on a three-day trip to the West Coast. AP Photo/Susan Walsh

President Obama on Monday announced new measures to help borrowers refinance their existing mortgages to new loans with lower interest rates and cheaper monthly payments.

The plan is an expansion of an existing program to help borrowers who are not behind on their payments but cannot refinance because they do not enough equity in their home. Or they might be underwater--which means they owe more than their home is worth.

"Right now, some underwater homeowners have no choice but to refinance with their original lender - which some lenders refuse to do," Obama said in prepared remarks.

"These changes will encourage other lenders to compete for their business by offering better terms and rates, and eligible homeowners to shop around for the best ones," he added.

But how many homeowners will it really help? And will it be enough to jumpstart the still struggling housing market?

Dean Baker is the Co-Director of the Center for Economic and Policy Research here in Washington, spoke with CBS News and said if 800,000 borrowers are able to refinance, that would be "very good."

That would be a big help to those borrowers, but probably not enough to make much of a difference in the overall economy, he added.

Despite the relatively modest effect, Mr. Obama and his team recognize the president needs to be seen on television everyday as someone "trying to solve problems, said Larry Sabato, a politics professor at the University of Virginia.

"It's a smart approach and long overdue," Sabato said, noting that the administration is "out of time" as the presidential election is just a year away.

MoneyWatch: More details on Obama's new plan

"They realize that Obama probably can't get a Mother's Day resolution passed through Congress," so he has to move ahead with incremental measures that help pockets of Americans.

Housing analyst Edward Pinto stressed that the plan would mostly help borrowers who owe less than their mortgage, despite the repeated talked from White House officials that it is aimed at so-called "underwater" borrowers.

"I think it's important not to get expectations up too high," said Pinto, a fellow at the conservative American Enterprise Institute and a vocal critic of Fannie Mae and Freddie Mac, the two government sponsored entities that are backing the loans eligible for refinance under the Home Affordable Refinance Program (HARP).

Pinto noted close to a million borrowers have gotten a HARP refinance loan since it was introduced two years ago, but only about 100,000 of them were borrowers who owed more than their house is worth. Without the HARP program, borrowers would have to owe less than 80 percent of the loan's value to refinance, so the majority of borrowers who got new HARP loans were in that 80 to 100 percent range, Pinto said.

Even with the expanded program, "they are not going to help a million" more underwater borrowers, Pinto added.

  • Corbett Daly On Twitter»

    CBSNews.com Deputy Politics Editor Corbett B. Daly is based in Washington. He has worked at Reuters, Thomson Financial News and CBS MarketWatch.

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