The Obama administration announced the Home Affordable Modification Program on March 4 2009, officially allowing up to 9 million homeowners to reduce their mortgage payments by modifying their loans. A Loan Modification is a process of modifying your current mortgage to give you a lower interest rate. This allows you to receive a lower monthly payment, without having to refinance.

The Treasury Department has allocated $75 billion in incentives to the lending community to in exchange for modifying loans within their portfolio. This includes upfront incentive fees in addition to contributing funds towards the reduction of the borrower’s monthly payments.

The Obama mortgage plan

Below is a list of key elements of the plan outlined Wednesday by President Obama that aims to aid as many as 9 million households in fending off foreclosures:

• Allows 4 million–5 million homeowners to refinance via government-sponsored mortgage giants Fannie Mae and Freddie Mac.
• Establishes $75 billion fund to reduce homeowners' monthly payments.
• Develops uniform rules for loan modifications across the mortgage industry.
• Bolsters Fannie and Freddie by buying more of their shares.
• Allows Fannie and Freddie to hold $900 billion in mortgage-backed securities — a $50 billion increase.

-Source: Marketwatch.com