WASHINGTON (7/28/08)--Federal lawmakers Friday called on the mortgage industry to delay or cancel foreclosures until a new law designed to refinance in-trouble borrowers goes into effect on Oct. 1. The new legislation, which is expected to be signed by President George W. Bush, will allow qualified applicants to refinance into FHA-insured mortgages and avoid foreclosures. House Financial Services Committee Chairman Barney Frank (D-Mass.) and Housing and Community Opportunity Subcommittee Chairwoman Maxine Waters (D-Calif.) through a press release urged the mortgage industry to work with borrowers who can take advantage of the new refinancing program. Chairman Frank will hold a hearing in September to monitor the progress of loan modification by mortgage servicers. “I would hope that no one would be foreclosed upon between now and October 1st who would have qualified for this program had the effective date been immediate,” cautioned Frank. “And that is within your power to do. You can show some forbearance.” To qualify for FHA refinancing under this program, borrowers must have more than 31% of their monthly income dedicated toward their mortgage payment as of March 1, 2008, and live in their only home. Borrowers would have to meet the specific qualifications of the FHA program, and would have to agree to share future home appreciation with the government. Lenders would also have to agree to significant reductions in the amount owed to them. The Congressional Budget Office estimates that at least 400,000 families will avoid foreclosure at no cost to the taxpayer. In addition, Frank also called for restructuring the mortgage servicing industry if servicers fail to cooperate in aggressively forbearing and preventing foreclosures.