Bush Plans to Expand FHA Mortgages in Homeowner Bailout
Though President Bush has vowed to veto the Senate housing bill currently being considered, his administration announced that it plans to advance homeowner bailout programs of its own, beginning with the expansion of FHASecure, a program that transfers mortgages to prime-rate mortgages insured by the Federal Housing Administration.
The Federal Housing Commission hopes to refinance as many as 500,000 borrowers into FHA-backed mortgages by the end of the year. Those it is targeting are homeowners with adjustable-rate mortgages who got behind on mortgage payments. Those who were late on two monthly mortgage payments in the past year—either consecutively or at different times—will now be eligible for an FHA loan up to 97 percent loan to value, while those who missed three payments will be eligible for a loan up to 90 percent loan to value.
Homeowners with more outstanding debt may still be eligible if the lenders agree to write down the balance of the principal, a practice that will be encouraged by the promise of owning an FHA-insured loan when the lender previously faced starting foreclosure proceedings.
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