I don't think anyone knows - not even Obama himself - what he will do to try to ease the burden to distressed borrowers. He's facing an increasingly skeptical public; witness the national sentiment regarding the U.S. automakers, where a large proportion of Americans felt that the automakers deserved to fail and should not receive government aid. There are many out there that feel that some borrowers deserve to be hung out to dry.
This credit crisis was developing for a long time, and it's not going to get solved by some executive order or act of Congress. Keep in mind, that whether they are willing to admit their share of responsibility, the Democrats helped fuel this crisis by pressing FNMA deeper into the subprime market (with the intention of promoting minority and low-income home ownership) and resisting calls for greater legislation in the early 2000s. So, our new President might find himself stuck between a need to find potentially painful solutions and a desire to adhere to traditional Democratic principles. No, I am not absolving the Republicans of culpability - they had their chance to act in the early years of the Bush administration - I'm just saying that like a tree, this crisis has many roots.
Regardless of what can be accomplished in the early stages of the Obama administration, I fear that it may be too late for borrowers such as yourself. Any plan that is even remotely controversial will face resistance, if not from members of Congress then from special interest groups that could block its implementation. Some folks will not be able to find out where the dust will settle before losing their homes.
In your case, I again recommend that you post your story on the
CW board; there aren't as many people lurking on the success thread. The more detailed you are about your situation - loan balances, terms, etc. - the more specific your feedback will be. It seems like the cash taken out in your refinance went to "legitimate" expenses (i.e. you didn't use it to buy Ferraris and yachts), so if the question arises (it may not), then you have a reasonable answer.
Remember also that you need to demonstrate to
CW that you will be able to afford the modification if they offer one to you. You probably should come up with a debt reduction plan and budget, both to support your application for a modification and to improve your long-term financial security.