The Hope for Homeowners program, which was launched October 1^st, to try and help struggling homeowners, has had a rocky start. To date, only a few mortgages have been able to be modified and HUD, the Department of Housing and Urban Development, is working on making the program more accessible to a greater amount of troubled homeowners. The secretary for HUD, Steve Pretson, commented on these latest developments saying, "Clearly, meaningful changes were needed...These modifications should increase lender participation and help more families who are having difficulty paying their existing mortgages, but can afford a new affordable loan insured by HUD's Federal Housing Administration."

Several changes are in the works, the biggest involving loan write downs. Now lenders that participate in the program, wont have to write down loans as much. Under the new regulations, they can reduce the mortgage principal to 96.5% of the home´s current value, which is higher then the previous level of 90%. This would only apply to those whose new loan payments, would not surpass 31% of their gross income, leaving the write off as 90% for those who are paying a higher portion of their income towards their loan. Tom Deutsch, deputy executive director of the American Securitization Forum, a representative group for investors dealing with mortgage backed securities, commented that "This balances competing aims of encouraging more borrowers to enter the program while controlling for potential losses due to redefaults,". It would now be cheaper for lenders to participate in the program, which is voluntary.

A secondary, but still important change, is in regards to second lien holders. These involve home equity lenders with homeowners who want to refinance with HUD loans. Second lien holders are normally a problem or slow front in regards to the mortgage modification process because they have no benefits with refinancing, or mortgage workouts. The home value collateral is normally less then the amount owed to them. HUD would now make up-front payments to second lien holders who would in return stop receiving any future payments. The amount of the payment would be negotiated on an individual basis, and theoretically if the borrower owed more then the home value, making the second lien have a lower value, HUD would pay less. Deutsch estimates that the payments would be around 5% of the second lien for severely troubled loans to 30% for those that are not as troubled.

Other changes made will allow lenders to extend loan terms from 30 to 40 years, allowing borrowers to reduce monthly payments. There was also a three month trial period that borrowers had to follow before being able to have permanent loan modification, where they paid their loan amounts fully and on time, that has now been eliminated from the program. One of the original creators of the HOPE program, Representative Barney Frank, a Massachusetts Democrat, remarked on the positive actions being taken, "These are very helpful steps and reflect a commitment to meeting the need for more aggressive action to diminish foreclosures,". Time will only tell, in finding out if these steps can increase the amount of struggling homeowners, and prevent the masses of foreclosures streaming into the market.