May 12, 2010

Refinance help floated to underwater homeowners

By Marcie Geffner - Bankrate.com

Underwater homeowners may be able to refinance into a loan insured by the Federal Housing Administration, or FHA, and get rid of some of debt -- but only if their lenders agree.

The federal government has announced adjustments to FHA programs intended to increase the number of qualifying mortgages "responsibly restructured and refinanced into FHA loans as long as the borrower is current on the mortgage and the lender reduces the amount owned ... by at least 10 percent," according to congressional testimony by Phyllis Caldwell, chief homeownership preservation officer at the U.S. Treasury Department.

The program is aimed at homeowners who owe more than their homes are worth -- so-called "underwater" homeowners -- and differs significantly from the Home Affordable Refinance Program started up about a year ago.

Read on:
http://www.bankrate.com/finance/refinance/refinance-help-for-underwater-homeowners.aspx