The nation's political leaders have come up with another foreclosure prevention program to help homeowners struggling with unaffordable mortgages save their homes.

The HOPE for Homeowners program begins this fall. Here's where to find out what you must do to apply and qualify for help.

It's intended to help 400,000 homeowners refinance into fixed-rate loans with reasonable payments.

That's something borrowers struggling to keep up with rapidly rising payments on their adjustable-rate loans desperately need to do but can't because they don't have enough equity in their homes.

We would like to believe this will be more successful than Washington's previous efforts to deal with the mortgage crisis, such as the highly publicized interest rate freeze and FHASecure.

They were flops that didn't help nearly as many homeowners as expected.

We have our doubts about the new plan, as well.

The problem is that borrowers won't have the final say on whether to take advantage of the new refinancing program. It will all be up to their lenders.

HOPE for Homeowners allows even the most desperate borrowers to apply -- those who are "upside-down" on their loans and owe more than their homes are worth.

But that requires their lenders to accept a significant loss.

Let's say you borrowed the entire purchase price of a $200,000 house a couple of years ago. You still owe $198,000, but property values in your area have declined and your home is worth only $170,000 now.

That makes it nearly impossible to swing a traditional refinancing because your collateral (the house) isn't worth as much as you need to borrow to pay off the original loan.

HOPE for Homeowners gets around that by having the Federal Housing Administration guarantee the repayment of a new loan. But this comes with a big caveat -- you can't borrow more than 90% of what your home is currently worth.

In our example, the homeowner can borrow just $153,000.

That means the original lender must accept $153,000 as full payment on a $198,000 debt -- a 23% loss -- or haircut, as it's often called in the lending industry.

If the lender doesn't accept the loss, the homeowner can't take advantage of the HOPE program and will continue down the road to foreclosure.

Throughout the mortgage crisis, government leaders such as Federal Reserve Chairman Ben Bernanke; U.S. Sen. Chris Dodd, D-Conn., and U.S. Rep. Barney Frank, D-Mass., have urged lenders to accept similar losses by forgiving some of the debt on those high-cost ARMs borrowers can no longer afford.

Lowering the principal on a loan is one of two major ways to lower monthly payments and help homeowners avoid foreclosure. (The other option is to reduce the interest rate.)

But the big hedge funds, banks and mortgage companies that own much of that debt have been uniformly, and unrelentingly, unwilling to do so.

They've preferred to foreclose.

We're skeptical that those investors will be willing to change now, just because the government has a new refinancing program.

We raised this problem with Steven Adamske, a spokesman for Frank, who chairs the House Financial Services Committee.

"We have gotten some positive feedback from some of the (lending) institutions," Adamske told us, but he acknowledged, "No one's acting like it's the greatest thing since peanut butter."

Given that, we suspect most of the borrowers lenders allow to refinance through HOPE for Homeowners will have some equity in their homes.

They may not have enough equity to qualify for a new loan without government help, but they'll have enough to ensure that their existing loans are fully repaid.

But borrowers who are upside-down will remain stuck in their deceptive and costly option ARMs and 2/28 and 3/27 mortgages.

The record number of foreclosures caused by those loans is driving the current mortgage crisis and pushing the economy toward recession.

More than 1.5 million homeowners lost their properties to foreclosure last year -- more than twice the historical average -- and that figure may exceed 2 million in 2008.

HOPE for Homeowners begins Oct. 1.

In the meantime, here's our best advice on how to avoid foreclosure.

By Regan Doherty

Interest.com Associate Editor

Have a question about your finances? Ask us at editors@interest.com.