The plan also involves forgiving a portion of the borrower's mortgage balance.

Say, for example, a couple had an outstanding mortgage balance of $90,000.

She pays $300 toward a mortgage balance of $5,477.

The couple had a mortgage balance, including arrears and penalties, of $151,000, when they filed for bankruptcy in 1991.

Interest that accrues is added to the mortgage balance.

That stayed true even in the late 1990's, when home prices were rising at a good clip and mortgage balances rose more slowly.

Say a homeowner has a house worth $200,000 and a mortgage balance of $150,000.

A point is equal to 1 percent of the mortgage balance.

The full amount of the mortgage balance is unquestionably owed the lender.

It was enough to pay off the Sextons' $46,000 mortgage balance and $7,200 in back taxes.