That's in addition to 11 million borrowers who have loans guaranteed by the government-affiliated mortgage giants, Fannie Mae and Freddie Mac, who could be eligible for refinancing under the administration's proposed changes.
Still, economists say that without reducing the burden on homeowners who are late on their payments, any new housing program will achieve little.
"Anyone who is already behind on their mortgage payments, and is therefore much closer to actually losing their home, won't benefit," said Paul Dales, senior U.S. economist at Capital Economics. "As such, the policy won't do anything to reduce the mountain of 3 million homes that are still at risk of foreclosure."
Bankers oppose Obama's proposal to impose a fee on large banks to pay for the program and Obama has been unable to win support for such a fee in Congress.
Frank Keating, president and CEO of the American Bankers Association, said such a fee would "directly reduce lending capacity." And Brian Gardner, a senior vice president at Keefe, Bruyette and Woods, a Washington investment bank, called the proposed bank tax a "poison pill" for the legislation.
Administration officials said Obama was open to other means of paying for the program if the bank fee becomes too much of an obstacle.
Past administration initiatives have fallen short of expectations. For instance, an earlier plan, the Home Affordable Refinance Program, which allows borrowers with loans backed by Fannie Mae and Freddie Mac to refinance at lower rates, has helped about 1 million homeowners, well short of the 4 million to 5 million the administration had expected.
"I'll be honest, the programs we've put forward didn't work at the scale we'd hoped," Obama said. "Not as many people have taken advantage of it as we wanted."
Obama also announced new industry standards for mortgage servicers, a sort of "bill of rights" for borrowers that would protect them in their transactions. During his remarks, Obama brandished a simpler, three-page loan document to illustrate the new standards.
Separately, the Agriculture Department launched a pilot program in 19 states that could help rural homeowners refinance loans that were made or guaranteed by the department's loan program, USDA Rural Development. The department estimates 235,000 homeowners would be eligible for refinancing.
The administration will also undertake a program that would allow the sale of foreclosed homes by Fannie Mae to investors who would then offer the properties for rental.
"As we know and a lot of families know," Obama said, "that empty house or 'for sale' sign down the block can bring down the price of homes across the neighborhood."
AP Economics Writer Derek Kravitz contributed to this report:
Administration's sample loan document: http://www.consumerfinance.gov/wp-content/uploads/2012/01/Jan2012_Estimate_Honeylocust.pdf
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