In a move that suggests its initial rescue plan was insufficient, the Obama administration yesterday announced plans to widen the eligibility parameters of a key housing initiative. The change would allow borrowers with mortgages valued at 125 percent of their home's worth to refinance into more affordable loans. Previously, only borrowers with so-called loan-to-value ratios of 105 percent or less could do so. The mortgage refinancing program is part of the president's two-pronged plan to pull the nation out of its worst housing slump since the Great Depression. Coupled with efforts to modify troubled mortgages, the government believes its Making Home Affordable initiative can reach up to 9 million American homeowners. "The president's Making Home Affordable plan is already helping far more families than any previous foreclosure initiative, and with today's announcement we will extend its reach still further," Housing and Urban Development Secretary Shaun Donovan said.

Here are six things you need to know about the expanded rescue:

[See The Top Housing Markets for the Next 10 Years.]

The lynchpin of President Barack Obama's plan to rescue troubled home owners--and the housing market as a whole--is a sweeping effort to restructure distressed home loans through a process known as "mortgage modifications." The plan offers cash incentives to mortgage servicers who agree to bring a borrower's monthly loan payments down to 31 percent of their gross monthly income. The administration believes that making monthly mortgage bills more manageable will limit the home foreclosures that are putting such downward pressure on real estate prices.

[See Obama's Loan Modification Plan: 7 Things You Need to Know]

But mortgage modifications have a checkered history of success. The Office of the Comptroller of the Currency, for example, says that almost 53 percent of loans modified in the first quarter of 2008 went bad again within six months. Proponents of loan modifications, meanwhile, argue that the approach can work--as long as mortgages are restructured the right way. The first-quarter mortgage metrics report released Wednesday by the OCC and the Office of Thrift Supervision included detailed findings on the mortgage industry's efforts to modify home loans so far. Here are five things you should know:

 The first-quarter mortgage metrics report released Wednesday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision had all kinds of telling data. Among the most interesting was this finding:

Prime loans, which represented two-thirds of all mortgages in the portfolio, experienced the highest percentage increase in serious delinquencies, climbing by more than 20 percent from the prior quarter to 2.9 percent of prime mortgages.

The finding is another example of how the eroding labor market is playing a key role in driving mortgage delinquencies higher. And as the economy continues to shed jobs, additional borrowers with good credit will fall behind on their mortgage payments as well.

The Mortgage Bankers Association said Wednesday that the number of applications for home loans fell nearly 19 percent in the week ending June 26 from the previous week, as demand for mortgages dropped to seven-month lows. Refinancing applications plunged 30 percent from a week earlier.

The number of people applying for mortgages--especially to refinance--has been hammered by the recent sell off in the Treasury market, which sent fixed mortgage rates screaming towards 6 percent. But what's interesting about the most-recent dip in mortgage applications is that it comes even as mortgage rates move modestly lower. Thirty-year, fixed mortgage rates hit 5.57 percent during the week of June 12, but have since fallen steadily, reaching 5.34 percent in the most recent report.

[Mortgage Rates Head for 6 percent: 5 Reasons They Might Retreat]

President Barack Obama's loan modification plan gives servicers all kinds of options for getting a borrower's debt-to-income ratio down to that 31 percent threshold. They can extend the terms of the loan, lower the interest rate, and even--if they are so inclined--trim the unpaid principal balance of the loan itself. But the administration has been criticized for not mandating that servicers write down the principal balance when they modify a loan, which, some argue, would improve the effectiveness of the program.

"For underwater loans, if you don't write down the balance to be less than the value of the house, people still have an incentive to default," Richard Green, the director of the Lusk Center for Real Estate at USC, told me when the details of the plan were unveiled in early March. "Writing down the principal first instead of last—which is what [the Obama administration is] proposing—makes sense to me."

[See Obama's Loan Modification Plan: 7 Things You Need to Know]

The Federal Reserve today left its benchmark interest rate unchanged at virtually zero as it indicated that the economy—while still fragile—appears less imperiled than it did several months back. "Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing," the central bank said in its statement. "Conditions in financial markets have generally improved in recent months." The announcement comes amid growing concern over mortgage rates, which have surged in recent weeks. Elevated mortgage rates threaten to upend President Barack Obama's plans to revive the housing market—and the economy as a whole—by limiting home loan refinancings and putting additional downward pressure on residential real estate prices. To that end, here is a step-by-step way to evaluate what today's announcement from the Fed could mean for mortgage rates:

1. Mortgage rate trends: Thirty-year fixed mortgage rates plunged to new lows after the Fed announced a series of initiatives beginning last fall, such as purchasing Fannie Mae and Freddie Mac mortgage-backed securities and long-term treasury bonds. But late last month, rates began to spike, surging from 5.03 percent on May 26 to 5.81 percent on June 11, according to HSH.com. The run-up was sparked by mounting concerns over government spending and potential inflation, which pushed yields on 10-year treasury notes—which fixed mortgage rates typically track—sharply higher. More recently, rates have retreated modestly, hitting 5.59 percent yesterday. Still, they remain significantly higher than the all-time lows of less than 4 percent reached during the winter.

[Mortgage Rates Head for 6 percent: 5 Reasons They Might Retreat]

Although May home sales fell 3.6 percent from a year earlier, they increased more than 2 percent from April, the National Association of Realtors said Tuesday in its existing-home sales report. The report came as a bit of a disappointment to some economists, who had expected a larger increase. Still, "a gain is a gain, we suppose," Ian Shepherdson, chief U.S. economist at High Frequency Economics, said.

Here are five things you need to know about the May existing-home sales report: