By Derek Kravitz
AP Economics Writer
WASHINGTON (AP) — The Obama administration says it will will expand its signature foreclosure-prevention program to try to help those with heavy debt loads avoid losing their homes.
The Home Affordable Modification Program will also be extended through 2013.
The government will triple the financial incentives for private lenders to reduce the principal amount of mortgages for homeowners at risk of losing their homes.
And for the first time, the government will offer incentives for principal reductions to government-controlled mortgage giants Fannie Mae and Freddie Mac.
The three-year old program has strived to help those at risk of foreclosure lower their monthly payments.
But it has failed to help more than half of those who have applied lower their payments on a permanent basis.
Many have complained that the program is a bureaucratic nightmare.
The government has tried several different approaches to help struggling homeowners.
The Obama administration has promised to unveil new legislation in the coming days to allow more homeowners to refinance their mortgages under a separate program, the Home Affordable Refinance Program.
Homeowners who are accepted into the program receive interest rates as low as 2 percent for five years.
They can repay their loans over
The average savings for those who remain in the program is about $500 per month.
More than 1.7 million troubled homeowners received trial modifications over the past two years.
Less than half of those who applied, or more than 900,000, have had their mortgage permanently lowered.
A majority of the applicants have dropped out of the program altogether.
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