The $787 Billion Stimulus Plan gives a tax credit for "first time" homebuyers.  The plan gives first time homebuyers who purchase a home between now and November 2009 the lower of an $8,000 or 10% of the value of the home tax credit (if you are a couple and make over $150,000 or single with income above $75,000/year the tax credit amounts are less).  Remember a tax CREDIT is different that a tax DEDUCTION...a tax deduction only reduces your taxable income!  Buyers will have to repay the credit if they sell their home within the first three years.
     The Stimulus Plan also helps homeowners with tax incentives extended through 2010 for purchases designed to help promote energy-efficient investments such as new furnaces, energy-efficient windows, doors or insulation, and another provision provides $5 Billion for energy efficient improvements for "modest income" homes to improve weatherization.  Another provision provides $2 Billion for communities to purchase and rehab foreclosed vacant properties.  Experts at the National Association of Realtors estimate that the tax credit for first time buyers should generate 500,000 additional home sales this year. 
     The "Homeowner Affordability and Stability Plan" is broken down into three categories:

• Homeowners making their payments - but they are at risk of default/foreclosure.  If mortgage holder has a Fannie Mae or Freddie Mac Loan, they would be eligible to refinance as long as their mortgage does not exceed 105% of the home's current market value.  An incentive payment of $500 will be paid to loan servicer and $1,500 to the mortgage holder IF they modify at-risk loans BEFORE the borrower falls behind.  Further details are expected to be released in early March.
• Homeowers currently in default.  If the lender voluntarily agrees to lower a borrowers payment so that it makes up no more than 38% of the borrower's income, the US Government will share the cost of lowering the mortgage burden to 31% of income.  The incentives to lenders/servicers include a $1,000 payment for each modification, and buyers can receive up to a $1,000 payment per year as an incentive to stay current on their new mortgage.  An additional provision still in the works would allow bankruptcy judges to require loan modification ("cramdown") as part of a household's restructuring (will require legislation by Congress).  The loan modification guidelines are still being developed by the Treasury Department, and any financial institution that receives Financial Stability Plan funds will be required to implement loan modifications consistent with the new Treasury guidelines.
  
• Fannie Mae and Freddie Mac.  This will double resources to those agencies to encourage investors to buy their mortgage backed securities.

The plan does NOT provide any assistance to investors, homeowners who are in trouble with a second home, or homeowners whose mortgages are part of a private-label mortgage that is NOT backed by Fannie Mae or Freddie Mac. 
     The Plans are lacking details so it is too early to comment on the final effects of the combination of these plans. However the good news is that there is a plan, and that Washington finally realizes that housing sector needs attention. Stay tuned!