The Treasury Department has revised the President's loan modification plan to require participating servicers to consider the FHA Hope for Homeowners program as an option and write down the principal amount of the mortgage.

"For borrowers where Hope for Homeowners works, it can be a better option for them," because it allows underwater borrowers to re-establish equity in their homes, HUD secretary Shaun Donovan said. If the investor is willing to do a writedown, "that will be first alternative to a modification," the Department of Housing and Urban Development secretary told reporters.

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