"The real estate problem in California is obviously much deeper, worse and widespread than in the nation," said Sung Won Sohn, economics professor at Cal State Channel Islands. "Any support from the government to help housing in general should help California disproportionately."

Two facets of the three-fold plan - loan modifications for struggling homeowners and more capital for Fannie Mae and Freddie Mac to help reduce mortgage rates - are likely to prove a much-needed boost for California and the Bay Area, experts said.

However, a third aspect - access to low-cost refinancing for people whose homes are dwindling in value - could be off-limits to many homeowners in California and especially the Bay Area, because it applies only to mortgages of less than $417,000.

"These refinances are all for mortgages that were originally issued by Fannie Mae and Freddie Mac," said John Quigley, professor of economics, public policy and business at UC Berkeley. "The California housing market had higher prices and was more overheated, so a much smaller fraction of mortgages in California were through Fannie and Freddie and under the conforming limits." Until a year ago, conforming mortgages were those less than $417,000. "That means homeowners in California will not be advantaged by this program as much as those in lower-cost areas."

Nonconforming loans

That disparity is even more pronounced in the Bay Area. In 2005 and 2006 - at the height of the housing boom - about 60 percent of all purchase loans in the nine-county region were nonconforming jumbo loans, according to MDA DataQuick, a real estate research firm in San Diego. In the same years, about a third of all purchase loans in California were jumbos, it said.

None of those jumbo loans qualify for the refinancing designed to help "responsible homeowners" (meaning those who put money down and have made payments on time) reduce their monthly payments, even if they have little or no equity in their homes.

About half of all people who bought homes in the Bay Area in 2005 and 2006 are now underwater - owing more than their homes are worth - according to real estate service Zillow.com. Such homeowners cannot refinance their loans under current guidelines, but the Obama plan would allow even those who owe 5 percent more than their home's value to refinance - but only if their original loan was less than $417,000.

"They should expand (the refi program) to the broader market (of larger loans)," said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley. "It would be foolish not to. This helps California a lot less than the rest of the country. California should demand refinances for our higher house prices."

Rosen and other experts said the plan's other components of modifying mortgages for struggling homeowners and providing capital infusions to help lower mortgage rates should clearly benefit the Golden State.

"Any plan that helps stabilize housing prices and reduce foreclosures will benefit California disproportionately because prices in California have gone down more than any other state and the foreclosure rate is particularly high in California," said Jed Kolko, a research fellow at the Public Policy Institute of California in San Francisco

California prices are down 25 percent since the market's peak a couple of years ago, Kolko said. That figure varies widely around the state, ranging from more than 50 percent depreciation in parts of the Central Valley to less than 10 percent in Bay Area regions such as San Francisco and Marin County.

Among the plan's most controversial aspects is Obama's call to reform bankruptcy law so judges can reduce mortgage principal to match a home's current value. That move would require congressional approval and is fiercely opposed by bankers, who say it would drive up rates for everybody, because mortgages would become "unsecured debt" like credit cards.

But for homeowners who owe more than their homes are worth, it looks like an escape hatch.

East Oakland resident Nadine Scott, 47, was pleased to hear about that provision. Scott said she fell into foreclosure on her home, and subsequently into bankruptcy, after a disability forced her to retire early from her job with U.S. Postal Service.

She owes $535,000 on a home that is now worth about $180,000, and her monthly payments are more than $4,000, she said.

"That really gives people like me hope," she said.

Nationwide, about one in seven homeowners owe more than their home is worth. The number is much higher here, according to DataQuick, with 26 percent of Californians and 24 percent of Bay Area homeowners underwater.

"The folks out here have seen 52 percent-plus declines in values," said Thomas LaFleur, executive vice president at Pacific Community Services, which has offices in Pittsburg and Fairfield to counsel troubled homeowners. "If this (Obama) program doesn't enable them to restructure and have substantial principal reduction, I think it won't have the effect here that it may in other areas."

Bankruptcy is such a drastic step that experts said they don't expect homeowners to pursue it cavalierly.

"People do everything they can to avoid bankruptcy," Rosen said. "No matter what some lenders say, people are not going to file for bankruptcy just to take advantage of this. You lose your credit; it's an awful experience."

A total of 236,231 homes statewide, or 2.8 percent of all California's housing stock, were repossessed by lenders last year, according to DataQuick. In the nine-county Bay Area, lenders took back 35,709 homes, or 2 percent of all homes and condos, it said.

Stopping the foreclosure hemorrhaging - and the associated plunge in value as lenders unload homes at fire-sale prices - is key to Obama's plan.

Details to come

Full details of the $75 billion loan modification plan won't be available for two more weeks. But based on the initial description, consumer advocates said they are optimistic that it will help, although it's too soon to say whether it will actually reach all 4 million households Obama promised.

"For the first time, the modification piece will provide a consistent set of standards with some transparency and some very strong incentives to lead to long-term, affordable loan modifications," said Paul Leonard, director of the California office in Oakland for the Center for Responsible Lending. However, he added, "I don't think anybody is pretending this is going to prevent all foreclosures. Their goal is 3 million to 4 million loan modifications, compared to the Credit Suisse estimate that there will be 8 million foreclosures by 2012."

Chronicle staff writer James Temple contributed to this report. E-mail Carolyn Said at csaid@sfchronicle.com.

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