The Obama Administration may have already announced their $275 billion mortgage bailout plan, but that doesn’t mean they have any clue as to how it will actually work. The Washington Post reports:

The administration is developing a standard for lenders to use in evaluating applicants that seeks to exclude homeowners who are not in real need or are too far behind in their payments to be saved. … Government officials are working to finalize details before a self-imposed March 4 deadline when the program will go into effect and lenders are likely to be flooded with calls.

A chief goal of the loan modification program is to address complaints of consumer advocates that borrowers are often turned away by lenders when they seek help before becoming delinquent on loans. The plan includes extra incentive payments for lenders that reach “at-risk” homeowners and modify their loans before they become delinquent.

“But what counts as an at-risk homeowner?
,” said Edward R. Morrison, a professor at Columbia Law School. He said policymakers should avoid setting a standard that encourages lenders and mortgage servicers to rework sustainable loans just to get payments from the government.

Administration officials involved in developing the program said they are basing their effort on a model developed by the Federal Deposit Insurance Corp. The formula to determine at-risk borrowers likely will weigh a homeowner’s debt level and payment track record, officials said. But in setting eligibility standards, they are also trying to determine what documentation borrowers should provide to prove they could lose their job or face a reduction in income, they said.