Democrats back massive expansion of FHA guarantees

Frank bill aimed at refinancing 2 million mortgages

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A top Democrat wants to give the Federal Housing Administration authorization to provide an additional $300 billion in mortgage guarantees to help refinance up to 2 million loans in cases where lenders agree to "substantial" principal write-downs.

A bill proposed by Rep. Barney Frank would require that lenders — or the investors who hold the rights to service a mortgage — agree to write-downs large enough to insulate FHA from losses and provide a "meaningful reduction" in a troubled borrower’s monthly payments.