Hope for Homeowners plan altered

NEW YORK (CNNMoney.com) - The Bush administration said Wednesday it is changing its nearly moribund mortgage rescue plan in an effort to get more lenders and homeowners to participate.

The Department of Housing and Urban Development's Hope for Homeowners plan, which Congress toiled over for months before passing legislation last summer, took effect October 1.

The program aimed to help hundreds of thousands of homeowners by putting up government insurance behind cheaper, refinanced mortgages for people at risk of foreclosure. But since then, few troubled mortgage loans have been modified under the plan. Now, in an effort to kick-start it, HUD is trying to open up the program to more homeowners.

In the biggest change, lenders that participate in Hope for Homeowners won't have to write down loans as much as they did under the original rules for the program. The new guidelines allow them to reduce mortgage principal to 96.5 percent of a home's current market value instead of 90 percent.
–From CNNMoney's Les Christie