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Washington
Bush administration offers new housing plan
WASHINGTON (4/10/08)—The Bush administration Wednesday announced a new plan to help troubled subprime mortgage borrowers by easing rules for new mortgages that could be insured by the federal government. Under the effort, the Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development (HUD), would new flexibility to insure mortgages for borrowers who were late on a few payments and those who have received a voluntary mortgage principal write-down from their lender. FHA Commissioner Brian Montgomery announced the new proposal at a hearing of the House Financial Services Committee, convened to discuss the economic, mortgage and housing rescue plan its chairman, Rep. Barney Frank (D-Mass.), unveiled last week with Senate Banking Committee Chairman Christopher Dodd (D-Conn.) Montgomery said of the administration’s proposal, "Our plan will help hundreds of thousands of desperate families who have no place else to turn for safer, lower cost ways to keep their homes. We want to be able to help families who are in the right house, but the wrong mortgage." He estimated that the proposed expansion of the FHASecure program could help about 500,000 families, struggling with high-cost subprime loans, to refinance into prime-rate FHA-insured mortgages in total by the end of this year. While both the FHA plan and Frank’s plan seek to shore up the floundering housing market by shifting over-burdened subprime borrowers into the stability and affordability of more traditional 30-year, government-backed loans, The New York Times estimated Wednesday that Frank’s more expansive plan could help 1.5 million borrowers.
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