President Bush has approved a plan to expand a housing program to insure loans for creditworthy homeowners unable to meet mortgage payments and which is expected to help about 500,000 borrowers by the end of this year, the White House said Wednesday.
"The expansion will allow the program to insure loans for Americans who may have been late with a couple of their payments, and are facing interest rate resets, but who are otherwise reliably creditworthy," White House spokeswoman Dana Perino said.
FHA Secure has helped nearly 150,000 borrowers, and with the expansion being announced on Wednesday, the program was expected to help about 500,000 by year-end, she said.
"This is not a silver bullet that will solve all the problems in housing, but it will help some additional people stay in their homes, and that's something the president wants to see," Perino said.
Brian Montgomery, Federal Housing Administration director, planned to detail the proposal at a congressional hearing on Wednesday.
The Federal Housing Administration is prepared to underwrite loans that have sunk in value if the lender will first erase a share of the existing loan, according to his prepared remarks.
Democratic lawmakers have called for the FHA to be expanded so that it can underwrite a large share of failing loans but Montgomery does not go that far in his prepared remarks.
Washington policymakers have faced increasing pressure to help staunch increasing foreclosures that are threatening to drive the U.S. economy into recession.