I have an 80/20 loan for a big $1M home since late 2005, I am current in my mortgage payment with no late so far, but I am struggling due to loss of income. The market value is currently around $300,000 below loan amount. I called the first mortgage company to discuss the option to modify the loan terms but they did not agreed to reduce the interest rate and offer me to sale the home short.
I heard of the new rescue bill that refinance the current mortgage to a new loan at 90% of current appraised value capped at $550,440.
Instead of short sale the home and lose it, I am wondering what is my options to keep my home with the current fare market value especially that the 90% of my current appraisal may be beyond that $550,440 limit. Instead of going to foreclosure due to that substantial amount of negative equity and inability of continuing payment under current reduced income.
Does anyone have any information for help?

Well basically you will not qualify for the new rescue bill which I might also add is voluntary for your bank to allow you to be a part of in the first place. The amount that you owe does limit your options. What you might want to consider is calling the Hope Now hotline at 1.888.995.HOPE they may be able to convince your mortgage holder to modify the terms and can also offer you some good advice. This is also a free service so its worth a shot.