New FHA help for homeowners

Struggling homeowners now have one more alternative to help them avoid foreclosure and remain in their homes, the US Department of Housing and Urban Development announced today.

HUD Secretary Steve Preston unveiled the so-called Hope for Homeowners plan that aims to help distressed homeowners refinance into 30-year-fixed mortgages with the backing of the Federal Housing Administration. The program was authorized by Congress this summer in legislation to address problems with the nation's housing market.

The measure targets struggling borrowers whose homes are now worth less than the outstanding amount of their mortgages and would otherwise not be able to refinance into more affordable loans.

Lenders could refinance these homeowners into new FHA-insured loans of up to $550,440, but they may need to write down a portion of the debt so the new mortgage does not exceed 90 percent of the property's new appraised value. Borrowers must be owner occupants who've made at least six mortgage payments before falling behind.

It's still unclear how many lenders will embrace the three-year program, which begins today.

"For homeowners in trouble, this may be the help they need,'' Preston said. "I strongly encourage homeowners and lenders to look into this program and other FHA products without delay."
(By Jenifer McKim, Globe staff)