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A little more information on the new housing plan in the form of these fact sheets [PDFs] from the administration, which includes a better answer on whether or not this is a giveaway to lenders:
If the total expected cost of a modification for a lender taking into account the government payments is expected to be higher than the direct costs of putting the homeowner through foreclosure, that borrower will not be eligible. For those borrowers unable to maintain homeownership, even under the affordable terms offered, the plan will provide incentives to encourage families and lenders to avoid the costly foreclosure process and minimize the damage that foreclosure imposes on lenders, borrowers and communities alike. Moreover, Treasury will not provide subsidies to reduce interest rates on modified loans to levels below 2%.Also see this useful hypothetical case study [PDF] that gives three examples of how the loan modifications would work, and a Q&A[PDF] directed specifically at homeowners. And these interviews with Barbara Sard and David Abromowitz from earlier in the day may interest you.
-- Tim Fernholz
