The Obama Administration said Tuesday it will throw an additional lifeline to struggling homeowners by giving lenders incentives to reduce borrowers’ monthly payments on second mortgages.

“With these latest program details, we’re offering even more opportunities for borrowers to make their homes affordable under the administration’s housing plan,” Treasury Secretary Timothy Geithner said in a statement.

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When home prices were soaring, banks profited from so-called “piggyback” second loans that required in many cases either small down payments or none at all.

Because those loans were often paid back using equity from the rising value of homes, banks saw no problem in making these types of loans to people with bad credit.

Now it’s a problem and many of those loans are facing default.

What’s more, many borrowers trying to get their primary mortgage modified at a lower monthly payment need the permission of the company holding the second mortgage.

The administration’s new plan is devised to coax those lenders into giving their permission. And the coaxing will done with financial incentives.

The program, which will be funded with $50 billion in financial rescue money, relies on a series of payments to mortgage companies to lower interest rates on second mortgages.

Mortgage companies would get $500 upfront for each modified loan, plus $250 a year for three years as long as the borrower doesn’t default, according to the program’s guidelines provided by the Treasury Department.

Similarly, borrowers would get up to $1,000 over five years applied to the principal balance of their primary mortgage, and the government would pick up part of investors’ costs as well. Lenders would also be given the ability to remove second mortgages entirely in exchange for larger government payouts.

The administration also plans to give mortgage companies $2,500 payments to entice them to participate in the “Hope for Homeowners” program, which was launched by the government last fall but has so far has been a failure.

It was supposed to allow 400,000 troubled homeowners to swap risky loans for traditional 30-year fixed-rate mortgages with lower rates. Instead only a handful of borrowers have been able to qualify, and as of earlier this spring only one loan had completed the program.