Under the modified plan, the loss-sharing rate declines from 50 percent on a loan with an LTV of 100 percent at the time of modification to 20 percent on a loan with a LTV of 150 percent. Loans with LTVs of more than 150 percent at the time of modification do not qualify for losssharing.
An alternative way to address this concern would be to base the amount of the government insurance payment on the loss in value relative to the appraised value of the property at the time of the loan modification.