The Obama administration announced a new plan to stem to push lenders to offer principal forgiveness as it announced the allocation of $14 billion in Troubled Asset Relief program (TARP) funds to give lenders additional incentives to lenders to reduce principal and refinance underwater borrowers into FHA-backed mortgages.

The Obama administration says that the plan will help stabilize the real estate market by keeping borrowers out of foreclosure.

The plan targets to help the underwater and the unemployed borrowers.

For the underwater borrowers or those who have negative equity on their homes, they can refinance into loans backed by the Federal Housing Administration. FHA will get $14 billion in incentive money from the federal bailout fund.

For the unemployed borrowers or those receiving unemployment benefits would have their mortgage payments cut to no more than 31 percent of their monthly income for three to six months to give them more time to find a job.