In Monday's update from U.S. Treasury Secretary Henry Paulson, it was made clear that the sub-prime bailout termed the Hope Now Alliance will be not as far-reaching as many had hoped.

Excluded from the provisions of this plan are the majority of the borrowers who are in trouble, including:

• Investors (non-owner occupied homes).
• Those who have refinanced.
• Those who are already behind in their payments.
• Those who can "afford" the payments after their loan resets.
• Those who are not in sub-prime loans, even though their rates will reset sometime in the near future.
• Those who can refinance into a fixed-rate loan.

So who will be helped by this Hope Now Alliance? Basically it's only geared towards those who are in sub-prime non-refi'd owner-occupied loans who can afford the mortgage now but won't be able to after the adjustment.

Wachovia's senior economist Mark Vitner has indicated that more than 50% of the increase in delinquent mortgages are actually investor-related. "It's hard to conceive how many people are actually going to meet this criteria. There's nothing at all in there that addresses investors."

Michael Shea, of the Association of Community Organizations for Reform Now (ACORN), said of the plan: "It helps. Don't get me wrong. But it's disappointing that we are nearly a year into the crisis and the Treasury Secretary is dealing with the easiest part of the problem."

The good news for taxpayers in general is that the Hope Now Alliance "does not, and will not, include spending taxpayer money on funding or subsidies for industry participants or homeowners," according to Paulson.

Sub-Prime Issues Being Forced Down to the State Level

According to Treasury Secretary Paulson, "State and local governments, especially in the hardest hit areas, are also developing solutions, including proposing funds that may help financially-able borrowers refinance out of expensive subprime loans."

"Given the local nature of housing markets, state and local solutions can be particularly effective. Current law allows states and localities to issue tax-exempt bonds only to assist first time homebuyers or homebuyers in designated distressed areas. Some states' housing agencies have initiated pilot programs, backed by taxable bonds, to help refinance struggling subprime borrowers into more affordable mortgages," Paulson says.

"Today, we are proposing to allow state and local governments to temporarily broaden their tax-exempt bond programs to include mortgage refinancings; if enacted, this will reduce the cost of innovative mortgage programs and allow these programs to reach more struggling homeowners," says Paulson.

So, in other words, the Feds will help a small percentage of the borrowers in trouble with their Hope Now Alliance, and the rest of the troubled borrowers will be pushed down to the state level for assistance.

Need Help With Your Sub-Prime Mortgage?

Supposedly "all Hope Now servicers are contacting borrowers 120-days in advance of their mortgage reset, to reach them early, before their mortgage problem becomes overwhelming" according to Treasury Secretary Paulson.

If you feel that you're going to be in trouble once your mortgage resets, call 1-888-995-HOPE to explore the options that are available to you. In addition, you may also want to consider the FHASecure program.