Bush to Expand Help on Mortgages

Wall Street Journal (04/09/08) P. A1; McKinnon, John D.; Paletta, Damian
A representative of the Bush administration is expected to announce an expansion of the FHASecure program at an upcoming House Financial Services Committee hearing, providing technical guidance to the program's 2,000 approved lenders. Up to 500,000 homeowners could benefit from the program, which aims to reduce monthly mortgage payments by requesting that lenders voluntarily reduce the loan principal to 90 percent to 97 percent of the property's current value. The mortgage would then be refinanced by the FHA; and while borrowers can have some blemishes in their payment history, they must meet other FHA credit guidelines and live in the home themselves. The announcement is expected to further ignite a debate about how much risk the government should assume to help ease the mortgage crisis, and observers point out that the expansion could put a damper on plans introduced in Congress to refinance $300 billion to $400 billion in distressed mortgages.