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Loan Modification Update

Getty ImagesIf you're perusing today's report from the TARP special inspector general, check out the section on Making Home Affordable, the Obama administration's plan to modify mortgages for people on the verge of losing their homes.

The report provides a coherent overview of the plan (the clearest we've seen so far) and what it will likely cost--up to $50 billion in TARP money. To modify Fannie Mae and Freddie Mac mortgages, $25 billion more will be tapped from the combined $400 billion that the Treasury Department made available to the two companies. Today's report covers only up to March 31, at which point the government hadn't started funding the modification plan.

Eventually, the money will go to lenders and loan servicers--to subsidize the cost of reducing monthly payments and encourage them to join the program.

Although it's optional for loan servicers to join, Treasury Secretary Tim Geithner told the Congressional Oversight Panel today that banks must participate to qualify for government assistance.

So far, 11 servicers have signed up, including Bank of America, JPMorgan Chase and Citigroup. See the full list here.

If you're underwater but are unsure whether you're going to apply, here is President Barack Obama's eligibility quiz to help.

A reminder to readers: In the coming months, we're going to be tracking just how successful Obama's plan is. In particular, we'll be following several borrowers who are looking for relief.

If you are applying for a loan modification through the government's plan, we want your story. Also feel free to forward this request to family, friends and neighbors.

Sign up in the above blue box and we'll be in touch with you.

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