The administration's newest push also seeks to more aggressively help borrowers who owe more on their mortgages than their properties are worth, by encouraging lenders to cut the loan balances of millions of these distressed homeowners and possibly refinance into loans backed by the Federal Housing Administration. The problem of so-called "underwater" borrowers has bedeviled earlier administration efforts to address the mortgage crisis as home prices plunged.

Second, government will double the amount it pays to lenders that help modify second mortgages, such as piggyback mortgages, which enabled home buyers to put little or no money down, home equity lines of credits. These second mortgages are an added burden on struggling homeowners, especially when their total debt, as a result, is greater than their home value.

This sounds like a mess. Didn't Citi and BoA already agree to cut deals with some homeowners, without being paid with our tax dollars as incentive?

Still makes no sense to focus on "underwater" homes, unless they were already planning to sell but won't sell short and instead walk away. Just because homes have lost on appraised value doesn't mean everyone should sell and move.

These walkaway jingle-key people need to know they'll have to pay taxes on their mortgage amount as income, even if they give the house back to the bank. I think the same applies to reduced principle loans--they'll have to pay a capital gains tax on the difference, won't they? And all of this will hit their credit scores in a big way.