The Bush administration is finishing the details of the plan to save thousands of homeowners who are at risk of foreclosure by helping them refi into more affordable mortgage programs. These mortgages will be backed by public funding. The program is aimed at helping homeowners who owe more than their home is worth due to decreasing home prices. The Federal Housing Administration is encouraging lenders to forgive a portion of those loans and issue smaller ones. This plan is similar to the legislation proposed about two weeks ago by Barney Frank who is the chair for the House Financial Services Committee.
Nearly 9 million homeowners currently have negative equity in their property. This is a serious problem. If a homeowner did have equity they could refinance. Current mortgage guidelines are prohibitive to finance a home that has negative equity.
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