A plan to subsidize mortgages is being developed. If the plan is passed, it would help current homeowners who are behind on their mortgage payments. The plan may cost around $50 billion but the results may be worth it.

Helping home owners pay their mortgage opens the gates for more lending, overall improved credit ratings and it could mean a more liquid flow of funds in the economy as consumers would be more likely to make purchases without having the heavy burden of late mortgage payments.

This big plan is to spend at least $50 billion to help borrowers before they get into trouble. Treasury Secretary Tim Geithner said, that he and his colleagues have been reveiwing foreclosure prevention proposals with banks, housing advocates, and trade organizations. In order to qualify for the subsidy homeowners are expected to take an affordability test and have their properties re-appraised.

The plan is supposed to help decrease the more than two million foreclosures expected in 2009. And ultimately, less foreclosures should translate to more stable home prices.

The other part of the plan ups the efforts to make homeowners’ monthly payments more affordable by reducing interest rates, stretching out the life of the loan terms, and deferring principal payments to the end of the loan.

We hope this will be the case, less foreclosures should mean more stable home prices.