However, only homeowners in very specific circumstances qualify. Candidates must live in their homes. They can already be behind in their payments or they must prove that they stand at the threshold of default because of financial hardship. The balance of their first mortgage can’t exceed $729,750, and they must make their new payment for a three month trial period in order to qualify.

For those who qualify, though, the savings can be dramatic. Say a homeowner has a $320,000 mortgage but can’t make the monthly payment of $2,023 (excluding taxes and insurance). Home Affordable could cut the payment to $1,254, with an interest rate of 2%.

And there’s an additional benefit: Although the program lasts for just five years, in each of those years the loan principal is reduced by $1,000 as long as the homeowner stays current on the payments. After the five years are up, the lender will increase the interest rate by one percentage point a year until it reaches the prevailing rate. (For details, visit www.makinghomeaffordable.gov.)

Homeowners who qualify must also deal with a tender that’s both in the program and willing to help. (Lenders get financial incentives from the government to participate.) Participation is voluntary but you can probably expect that lenders or loan servicers that handle loans owned or guaranteed by Freddie Mac or Fannie Mae will participate. By early May, 14 lenders had formally announced their participation in the program; their names and phone numbers are listed on the Making Home Affordable Web site. The extent to which these lenders will offer loan modifications remains to be seen.

If you need a loan mud, don’t wait for your lender to take action. Contact your lender and ask for the loss mitigation or home retention department. If you get the runaround, seek help elsewhere. Consumer advocate Ralph Roberts, In Detroit (www.keepmyhouse.com), advises clients to hire an advocate. A good option is to call a HUD certified housing counselor for free help (call the Hope Now hotline at 888-995-4673 or visit www.hopenow.com). Roberts also warns that loan modification assistance is the new gold rush and that scams abound (see “Scams Exploit Hard Times,” on page 60).

You may want to hire an experienced real estate lawyer to negotiate on your behalf. The lawyer should also review your original loan documents for signs that you were a victim of mortgage fraud, If that proves to be the case, you should gain additional leverage over the lender, regardless of whether it’s participating in the Obama plan. The leverage will help you modify or replace your loan, as well as forestall foreclosure. If paying legal fees is an issue, seek help from a legal aid society or horn lawyers doing pro-bono work.

Home values have plunged to their lowest levels since 2004, according to First American CoreLogic. And at the end of 2008, one in five mortgage holders owed more than their house was worth. That’s why, even with tantalizingly low interest rates, many homeowners haven’t been able to find a lender willing to refinance their mortgage.

Now lenders may loosen their purse strings. The $75 billion the government is injecting into housing could help some nine million homeowners refinance or, if they’re in dire straits, modify the terms of their loan.

The refinancing program is aimed at homeowners who are current on their payments but whose mortgages have fallen below the 20% equity threshold because of declining home values. Under the new program, you’re eligible for refinancing if your loan is owned or was packaged for sale in the secondary market by Fannie Mae or Freddie Mac. To find out whether you qualify, call the lender to which you make your payments, or contact Fannie Mac at 800-732-6643 or visit www.fanniemae.com: or contact Freddie Mac at 800-373-3343, www.freddiemac.com/avoidforeclosure. The new loan can’t exceed 105% of the current market value of your home, and you can’t get any cash out. The program ends in June 2010.

If you’re behind on your loan or can no longer afford the payments, you may be able to modify its terms in order to lower the monthly cost to 31% of your gross income. Loans must be on primary residences, must have been taken out before January 1, 2009, and must be equal to or less than $729.750.

Every couple of years, to determine the lifespan of the quarries, geologists conduct tests. You can’t dig in the ground ad infinitum and expect to get the same quality of stone. Rock Solid was just tested, and in terms of its breadth, depth, and the quality of what’s being pulled out of the ground, it’s still in good shape. The value of the two quarries Rock Solid owns is in excess of $11 million. But dirt and rocks won’t keep the business running. Because there is so little discretionary spending these days on landscaping or home improvement, no one’s buying these stones, and quarry excavation is down to bupkus. So is cash flow.

Of course, the two owners of Rock Solid have mortgaged their homes, tapped out their 401[k]s, and maxed out their line of credit. They owe the bank about $10 million, which is being collateralized by the value of their commercial real estate. As things stand now, they won’t survive another year. Their only hope is to sell one of the quarries while they are still viable, but in this market it won’t be easy.

Solution: Dig Deep

We’ve been fighting with the owners to get them to cut costs. They’ve got to mine for cash wherever they can. They are so deep in the debt hole, they need to get creative before they’re buried alive.

We’ve advised them to reduce work weeks from five days to four to save on payroll. Thousands of small cuts in their overhead costs will soon add up. Rock Solid also has to get aggressive on receivables. It has taken us weeks to persuade one of the owners to get in his car and confront his largest client, who owes him $350,000 in unpaid invoices. Another customer, a contractor on the verge of financial collapse himself, owes Rock Solid $2 million. The money is floating around in a bond, so it’s there to be had, but Rock Solid still needs to get paid. The owners must leave no stone unturned to get their hands on this cash. Liquidity is key.

This influx of capital will give them the precious time they need to find a lifesaving buyer for one of their quarries. The company was already offered $5 million, but in the form of a promissory note and a check for $200,000. Another deal fell apart because the would be buyer’s bank stopped lending in the middle of the transaction. Rock Solid must accelerate the selling process and focus on financially solvent businesses as potential buyers.

The owners need the cold hard cash in their pockets to pay off a mountain of debt and restructure their hefty bank loan. Their bank, seeing these effort to improve cash flow and the potential of a quarry sale, has just granted them a $600,000 loan extension. The company also won a new client, who’s ordering $250,000 of red stones per month. Rock Solid is also meeting with a potential quarry buyer this week. If a sale can take place in the next one to two months, it will buy the company another two years — enough time to ride out this recession and rebuild the business with granite strength fiscal discipline. If it can survive long enough to realize the quarry sale, Rock Solid will finally live up to its name.