President Obama´s loan modification plan is finally underway. On Wednesday, the Treasury Department introduced the first six organizations to sign up with the plan. They are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing. The amounts that each organization could get in incentive payments and subsidy are the following: Chase with $3.6 billion, Fargo with $2.9 billion, Citigroup with $2 billion, GMAC with $633 million, Saxon with $407 million, and Select with $376 million. Some of the organizations started modifying loans with government earlier this month while others will be starting soon. A spokesman for the Treasury also said that they hope to add more loan servicers. Wells Fargo feels that it is a positive step, announcing that "We view this modification program as yet another incremental opportunity for thousands of homeowners to preserve and maintain the dream of homeownership,".

The program was first announced by Obama on February 18^th. Since that moment troubled borrowers and housing counselors have been anxiously waiting to have it fully implemented, however it was not a short wait as terms had to be clarified and systems had to be updated within the participating financial organizations. It has been estimated that the plan could help as many as 9 million troubled homeowners keep their homes. The government has deemed $75 billion to subsidize some of the reduction in loan payments, besides giving thousands to servicers and borrowers as an incentive. The plan has two parts and to participate servicers would reduce monthly payments to an amount not over 31% of the borrowers´ pretax income, or to refinance the loan despite the homeowner having almost or no equity.

In regards to the servicers reducing interest rates, they only have to lower it to 38% of the pretax income, with the government providing the rest of the funds to bring it down to 31%. With reducing the loan balance, the government will also take on the cost along with the servicer, to the amount the servicer would have gotten if interest rate reduction had not occurred. With the incentives mentioned, serviers get $1,000 per modification and an additional $1,000 per year for a three year time period if the borrower makes timely payments. Servicers will also get $500, and mortgage holders $1,500 if the modify loans before a borrower defaults. Homeowners will also get $1,000 per year for a period of five years, if they stay current on their payments, with the funds being used to lower their loan principal.