The administration said it would extend the life of the Home Affordable Mortgage Program by a year through 2013 and widen it to reach more heavily indebted homeowners.
It also said it would provide incentives to encourage Fannie Mae and Freddie Mac, the government-controlled mortgage finance providers, to write down loans.
The HAMP program, which draws from the Treasury Department’s financial bailout fund, pays mortgage servicers to rewrite loan terms to reduce monthly payments.
When the administration launched the program in 2009, it expected as many as 4 million loans would be modified. So far, only about 900,000 households have permanently won new loan terms.