If you are underwater with your mortgage, or know someone who is, this could be the lifeline you're hoping for.

There is a program that has been quite successful in Pennsylvania that was designed to help unemployed workers make their mortgage payments and keep their house. According to the New York Federal Reserve Bank report, this program could be revamped as a federal progarm to help those who are underwater with their mortgage.

The State of Pennsylvania runs a bridge loan program and because of the careful screening of borrowers, there has been a high number of borrowers that were able to remain in their home while the seek new employment. The 80% success rate of borrowers being able to keep their homes proves the quality of this program.

Federal economists believe that the Home Homeowners' Emergency Mortgage Assistance Program (HEMAP) could be revised/restructured to help underwater borrowers by reducing the principal due on their mortgage.

The report states that currently, lenders are reluctant to write down the principal amount of the loan when the borrower is employed. "However, the incentive for the lender to write down principal increases significantly once a negative equity borrower experiences a job loss. Moreover, the potential to qualify the borrower for a HEMAP loan, which insures the borrower's ability to make the mortgage payments for at least two years, is an added incentive for the lender/servicer to agree to write down the mortgage balance."

The efficiency of this Pennsylvania program is what caught the Federal economists' attention. Though many people shy away from federally-run programs because of the red tape, the report concludes that, "lending by the government to a carefully screened group of unemployed borrowers can be a successful strategy to reduce foreclosures."

How could a program like this help? The process of writing down the principal balance would reduce the amount of the HEMAP loan as well as the monthly payment, thus providing a smaller loan amount due. And with a reduced monthly payment, it would be easier to afford this financial responsibility.

We'll keep you posted. In the meantime, if you have an immediate need, Grandview Lending will be happy to review your situation with you.