The Federal Housing Administration is willing to refinance certain delinquent borrowers with interest-only and payment-option adjustable-rate mortgages under the FHASecure program, which is designed to rescue subprime borrowers.However, the delinquency on an IO or option ARM must be the result of an interest rate reset or the full amortization of the mortgage, according to the Department of Housing and Urban Development. Shortly after HUD launched FHASecure on Sept. 5, lenders began asking whether IO and option ARMs would be eligible. HUD finally provided the answer in a newly revised "FHASecure Frequently Asked Questions" on the FHA website. Mortgage industry consultant Bud Carter pointed out the revision. "FHA will refinance almost any loan, except a conventional fixed-rate mortgage that is delinquent," he said. Mr. Carter is with Potomac Partners in Washington. The FHA can be found online at http://www.fha.gov.

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