In a motion that indicates its first rescue program was poorly planned, the President Obama administration early Wednesday announced plans to broaden the eligibility requirements of an essential housing initiative. The modification allows homeowners with mortgage loans worth atleast 125 percent of their properties value to refinance into a more affordable mortgage loan. The earlier Making Home Affordable Program only allowed for borrowers with loan-to-values of 105 percent or less. The Making Homes Affordable refinancing/modification plan is part of the Obama’s multi pronged attack on the nations deepest housing slump since the Great Depression. Coupled with efforts to alter struggling home loans, the government thinks its Making Home Affordable Program can reach up to 9 million American homeowners.

Here are 6 things you should know about the broadened rescue:

1. Reaches Far & Wide – The new standards just might make up to three million extra homeowners eligible to refinance or receive a loan modification through the Making Homes Affordable plan, according to the Federal Housing Finance Agency, which governs Freddie Mac & Fannie Mae.

2. Efforts so far – When it first rolled out the program in March of this year, the Barack Obama administration said the refinancing program could possibly reach to six million homeowners. In its release Thursday, HUD did acknowledge only tens of thousands of refinances had occurred so far, but not the millions first envisioned.

3. Freddie/Fannie – Despite the higher LTV ceiling, the basic framework of the plan continues in tact. Only borrowers with mortgage loans held or guaranteed by government-controlled housing finance heavyweights Freddie Mac or Fannie Mae can take part. Simultaneously, borrowers have to be current on their mortgage to have any chance at refinancing or getting a loan modification.

4. Loan interest rate hurdle – But hold on, everyone of those 3 million additional borrowers will end up refinancing their current loan. Some will not satisfy other program requirements, such as being current on their mortgage. But it’s the recent skyward trend in mortgage interest rates that presents perhaps the biggest threat to the plan’s success. Refinancing and loan modification applications surged last winter, after the federal government engineered mortgage interested rates of below five percent. Keep in mind that as bond traders continue to become rattled by sharper increases in government spending, they will, without any doubt in our minds, send interest rates soaring to above 6.75% by the end of the year.

Most borrowers generally need a full one percent point difference between their current mortgage interest rate and market interest rates in order to really benefit from refinancing, higher interest rates have pummeled the housing market. Even as interest rates have drifted lower in the last weeks, Making Home Affordable refinancing and loan modification applications have remained low. The average since 2003 is six percent, according to Freddie Mac. So the universe of mortgages that can be refinanced on a standard rate and term foundation just is not very large in the 5 percent range. We are really going to want interest rates to head back into the 4 percent range in order to get the mortgage bus rolling again.”

5. Additional housing tweak – The expansion of the Making Home Affordable Program program follows the Barack Obama administration’s recent change to its 1st time home buyer tax credit. In February, President Obama enacted this tax incentive, which offers up to $8,000 to qualified 1st time home buyer’s, to stimulate housing demand and assist in mopping up unnecessary supply. In May, HUD revealed a program that would provide borrowers swifter access to these funds.

6. Falling prices = Falling equity – The expansion of the qualification requirements comes as the housing market continues to slide downward. Home prices in 25 metropolitan areas fell by more than 20 percent in May from a year earlier. Sliding home prices suck the LTV out real estate. More than a fifth of American borrowers were thought to be underwater, meaning they owe more on their loans than their home is worth, from January through the end of March. This evaporation of home equity threw dirt in the gears of Obama’s refinancing program. That is because the initial conditions of the program precluded borrowers with mortgage loans above 105 percent of the home’s value from participating. But by enlarging the loan value cap to 125 percent, even borrowers who are way underwater will be eligible to refinance through the Making Home Affordable Program.