The Bush administration today offered to help financially strapped Americans avoid losing their homes by broadening a program that allows them to refinance into a Federal Housing Administration (FHA), government-insured home loan, even if they have missed several payments.

"[E]xpanding the FHASecure program administratively is the most appropriate and fastest means to help more families in need," Brian D. Montgomery, who is the assistant secretary for housing and the federal housing commissioner, told the U.S. House of Representatives' financial services committee. "As you know, we've been exploring options, and I'd like to share the administration's plan. We believe it is appropriately tailored to reach homeowners who have demonstrated their commitment to making on-time payments, even during times of financial stress."

Under the plan, the FHA would insure loans for "borrowers who are financially capable, but who have a spotty credit record," Montgomery said, backing loans with loan-to-value ratios between 90 percent and 97 percent, depending on the borrower's mortgage payment history. Those who don't have the required equity to qualify for the FHASecure program could speak with their lenders; banks who want to avoid the foreclosure process could write down the value of the house as needed so the borrower could be eligible for either program.

According to Montgomery, expanding FHASecure could allow more than 500,000 households to refinance into a FHA-backed loan by 2008's end. For a budget-crunched homeowner, the financial impact of that could be tremendous; government documents say that homeowners who move from subprime mortgages to FHAsecure reduce their housing payments by an average of $400 monthly.

The White House proposal is only one of many approaches swirling around Capitol Hill as elected and appointed officials try to stop the housing market's slide. Rep. Barney Frank (D-Mass.) has proposed allowing FHA to back as much as $300 billion in home loans for borrowers who need to refinance their mortgage or risk losing their house.

To read Brian D. Montgomery's speech:

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