President Bush has announced that the Federal Housing Administration will roll out a new program in a few days that will provide certain subprime borrowers facing default with a refinancing option.The "FHASecure" program will help many families who are struggling to refinance into FHA-insured mortgages and keep their homes, the president said. The program is designed to refinance creditworthy borrowers who have been current on their monthly payments up to the time of the reset of their subprime adjustable-rate mortgage. It is understood that borrowers would be able to roll up to six missed payments into their new FHA loan, but they can’t go above a 97.75% loan-to-value ratio (based on a new appraisal). For the program to have a real impact, investors or lenders will have to write down the amount of the existing mortgage so the borrower meets the FHA LTV requirement. Or else someone will have to put up a "cash transfusion to cover the shortfall," said consultant Brian Chappelle of Potomac Partners in Washington. President Bush stressed that the new FHA program is not a "bailout" for lenders, and he called on lenders to work with homeowners to modify or restructure their mortgages. "I believe lenders have a responsibility to help these good people," the president said.

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