While the Obama administration has been pushing lenders to modify loans rather than foreclose, most attention has been paid to first mortgages. But what about second mortgages? Rates on those are always higher than firsts, and it's been a popular way for homeowners to draw on equity, and thus, get in trouble.

Upon sale of the property, the homeowner will use their sale proceeds to pay off the Hope For Homeowners mortgage as well as the shared equity and shared appreciation mortgages.

The lender will qualify the homeowner for the new Hope For Homeowners mortgage using the guidelines established under the terms of the program’s unique statutory requirements, ensuring the homeowner has the capacity to make the new payment on the Hope For Homeowners mortgage in a timely manner.

If the lender refinancing the loan does not hold the senior mortgage lien, it will need to secure an agreement from the existing lien holder to waive all prepayment penalties and default fees on the existing loan and accept the loan proceeds from the Hope For Homeowners loan as payment in full.

Lenders of the Hope for Homeowners may have the following considerations:

There are four ways that a distressed homeowner could pursue participation in the HOPE for Homeowners affordable mortgage modification program.

The U.S. government today unveiled The Hope for Homeowners affordable mortgage modification and refinancing program. The program is unveiled by the U.S. Department of Housing and Urban Development.