"After reading your article, I thought, this isn't going to work for California," Speier said.

"I've drafted an amendment so that rather than being limited to whether the loan was conforming at time of origination, it will be based on (whether it's conforming at) the time of (modification), which will take the limit up to $729,750 in high-cost areas. This should make more people in the Bay Area eligible."

Speier's amendment addresses an aspect of the plan that encourages mortgage services to modify loans to make them more affordable for struggling borrowers. The modifications are supposed to reduce monthly payments to 31 percent of a borrower's income for five years; they also could include lowering the principal or refinancing the loan.

The amendment says that loan modifications must be available to loans that are "conforming," meaning those that can be securitized or guaranteed by Freddie Mac or Fannie Mae. The conforming loan limit was $417,000 until July 1, 2007. About 60 percent of homes purchased in the expensive Bay Area in 2005 and 2006 were bought with higher-cost "jumbo" loans above $417,000; about 30 percent of homes in California were jumbos in those years, according to MDA DataQuick. The limit is now $729,750 in high-cost regions, including most of the Bay Area.

"This puts some parameters around what the Obama administration didn't articulate in its plan and makes it so an important program for the Bay Area and surrounding counties will be widely available to folks, particularly in those areas where mortgages are very high-cost," said Drew Hammill, a spokesman for House Speaker Nancy Pelosi.

Hammill added that loan modifications might be available for even-larger loans, but this language "protects the conforming loan limit in particular areas, which is vital."

Pelosi supports the amendment and the bill, which is expected to pass the House.

A central aspect of the bill, called the "Helping Families Save Their Homes Act of 2009," is a change to bankruptcy law. That controversial proposal, fiercely opposed by the lending industry, would allow judges to "cram down" or reduce the principal owed on mortgages to the home's actual value.

The bill also attempts to resurrect the Hope for Homeowners program, another plan to help modify mortgages, which was introduced with great fanfare last year but has helped only a handful of homeowners, according to reports. It increases incentives, lowers monthly payments for borrowers who qualify, and attempts to simplify some of the terms and requirements.

Another part of the bill would indemnify loan servicers from being sued by investors if they modified mortgages.

More information about the Obama administration housing rescue plan is at www.financialstability.gov.

E-mail Carolyn Said at csaid@sfchronicle.com.

This article appeared on page A - 1 of the San Francisco Chronicle  Copyright 2009 SF Chronicle

"After reading your article, I thought, this isn't going to work for California," Speier said.

"I've drafted an amendment so that rather than being limited to whether the loan was conforming at time of origination, it will be based on (whether it's conforming at) the time of (modification), which will take the limit up to $729,750 in high-cost areas. This should make more people in the Bay Area eligible."

Speier's amendment addresses an aspect of the plan that encourages mortgage services to modify loans to make them more affordable for struggling borrowers. The modifications are supposed to reduce monthly payments to 31 percent of a borrower's income for five years; they also could include lowering the principal or refinancing the loan.

The amendment says that loan modifications must be available to loans that are "conforming," meaning those that can be securitized or guaranteed by Freddie Mac or Fannie Mae. The conforming loan limit was $417,000 until July 1, 2007. About 60 percent of homes purchased in the expensive Bay Area in 2005 and 2006 were bought with higher-cost "jumbo" loans above $417,000; about 30 percent of homes in California were jumbos in those years, according to MDA DataQuick. The limit is now $729,750 in high-cost regions, including most of the Bay Area.

"This puts some parameters around what the Obama administration didn't articulate in its plan and makes it so an important program for the Bay Area and surrounding counties will be widely available to folks, particularly in those areas where mortgages are very high-cost," said Drew Hammill, a spokesman for House Speaker Nancy Pelosi.

Hammill added that loan modifications might be available for even-larger loans, but this language "protects the conforming loan limit in particular areas, which is vital."

Pelosi supports the amendment and the bill, which is expected to pass the House.

A central aspect of the bill, called the "Helping Families Save Their Homes Act of 2009," is a change to bankruptcy law. That controversial proposal, fiercely opposed by the lending industry, would allow judges to "cram down" or reduce the principal owed on mortgages to the home's actual value.

The bill also attempts to resurrect the Hope for Homeowners program, another plan to help modify mortgages, which was introduced with great fanfare last year but has helped only a handful of homeowners, according to reports. It increases incentives, lowers monthly payments for borrowers who qualify, and attempts to simplify some of the terms and requirements.

Another part of the bill would indemnify loan servicers from being sued by investors if they modified mortgages.

More information about the Obama administration housing rescue plan is at www.financialstability.gov.

E-mail Carolyn Said at csaid@sfchronicle.com.

This article appeared on page A - 1 of the San Francisco Chronicle  Copyright 2009 SF Chronicle