Industry NewsMortgage

Bush administration beats Dems to the punch on FHA expansion

Democrats continue push for more ambitious foreclosure prevention plan

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The Bush administration on Wednesday announced it will expand the FHASecure loan guarantee program to allow an additional 100,000 families to refinance into more affordable mortgages, as Democrats kicked off a two-day hearing on a more ambitious, $300 billion FHA expansion plan. The Bush administration's plan to expand the FHASecure loan refinancing program would give the Federal Housing Administration the ability to insure loans made to refinance borrowers out of mortgages when they have missed a few payments or received principal write-downs from lenders. The expanded FHASecure program creates two new categories of eligible borrowers:Borrowers with adjustable-rate mortgage (ARM) loans who were late on two consecutive monthly mortgage payments or at two different times over the previous twelve months. FHA will require a 97 percent loan-to-value (LTV) ratio for these borrowers to refinance -- the standard now in force.Borrowers with ARM loans who were late on three conse...