Ensuring full support to US President Barck Obama's $75-billion housing foreclosure plan, which commences on 4 March, Bank of America Corp (BofA) has announced the extension of moratorium on foreclosures on housing loans until the eligibility details of the homeowner affordability and stability plan are released.

BofA said it would temporarily cease the foreclosure on first mortgage loans until 6 March.

Meanwhile, Wells Fargo Home Mortgage, the nation's largest mortgage originator, has extended its foreclosure moratorium on loans it owns to 13 March. Last week, Citigroup and JP Morgan enacted temporary moratorium on new foreclosures.

''We support the administration's focus on affordability in the loan modification and refinance processes in order to achieve long-term mortgage sustainability for homeowners,'' says Barbara Desoer, president of Bank of America Mortgage, Home Equity and Insurance Services.

The Obama plan outlines how lenders should lower interest rates for homeowners who have become delinquent on their mortgages; it also boosts access to refinancing for homeowners who owe more than 80 per cent of their homes value.

Mike Heid, co-president of Wells Fargo Home Mortgage says that the refinancing will open up new opportunities for consumers. ''It's a very comprehensive, very thoughtful plan that will go a long way towards helping stabilise housing in America,'' he said.

The foreclosure plan is part of a broader $275-billion effort by the administration to help struggling homeowners. The $75 billion will reduce the monthly payments for borrowers, help homeowners with loans owned or backed by the state-owned Fannie Mae and Freddie Mac to refinance at lower rates, and provide incentives to the industry. The government is also committed to buy up to $200 billion of preferred stock in each of the two housing lenders.

However, homeowners whose property values have dipped severely, putting them underwater by more than 5 per cent, those with huge mortgages (loans above $417,000), or speculators who bought homes for investment purposes are not eligible for refinancing.

The plan will enable as many as 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac to refinance their mortgages to take advantage of new low interest rates.

Under current rules, refinancing is not an option for most homeowners who owe more than 80 per cent of the value of their homes.

An additional 3 million to 4 million homeowners will be able to avoid foreclosure through the mortgage-modification programme. The initiative will be available to homeowners in default or at risk of default, which restructure the terms of loans.

Lenders will be responsible for reducing interest rates on these loans so the monthly payment would be no more than 38 per cent of the homeowner's income. Government funds would match further reductions in interest rates to bring the payment down to 31 per cent of income. As per the programme, homeowners should not be delinquent in the loans to qualify for the loan modification plan. They have to be current on payments.

The federal government will provide up to $200 billion in additional capital to Fannie Mae and Freddie Mac so that those institutions, which back most new home loans, ''can continue to stabilise markets and hold mortgage rates down,'' Obama said yesterday while releasing the plan.

Borrowers would also receive incentive bonuses of up to $1,000 a year for five years for making payments on time.

The president also endorsed a legislation that would allow bankruptcy judges to reduce the principal on homeowners' mortgages.

Some lenders, including JP Morgan Chase are concerned that the proposed legislation, giving judges the power to modify mortgages of those who file for bankruptcy, would increase the number of filings.

Bankers say Obama's plan is a decent route for homeowners to come back on track as the plan supports ''borrowers who have run out of options.''

''My administration will continue to support reforming our bankruptcy rules so that we allow judges to reduce home mortgages on primary residences to their fair-market value - as long as borrowers pay their debts under a court-ordered plan,'' Obama said in Mesa, near Phoenix in Arizona, on Wednesday.

US foreclosures reached 274,399 in January, the 10th straight month in which more than a quarter-million filings were processed, according to Relty Trac Inc, the California-based real estate data provider. Last year, more than 2.3 million homeowners faced foreclosure proceedings, an 81 per cent increase from 2007, and analysts say with markets world over struggling to stay firm, that number may skyrocket to as many as 10 million in coming years.

According to informal government estimates, writing down mortgage debt on houses that are underwater could total $1 trillion or more. The value of underwater homes could be as much as $700 billion below the mortgage values. And banks would recoup even less if the homes are allowed to go into foreclosure. There are roughly 10 million underwater homeowners.