Released: November 20, 2008

FHA relaxes rules for homeowners

Source: Dina ElBoghdady, Washington Post (Free Registration)

The Federal Housing Administration yesterday said that after less than two months it is relaxing terms of a program designed to help troubled mortgage borrowers because so far the effort has not been effective.

The announcement builds on the Bush administration’s push to have FHA play an expanded role in stemming foreclosures. The administration also intends the changes to bolster an argument against the need for a different mortgage modification plan floated by the Federal Deposit Insurance Corp., according to an administration official who spoke on condition of anonymity.

“When you have a plan a day you create confusion in the marketplace. . . . We’ve got to determine if there are ways to enhance the efforts that we’ve already taken,” the official said.

FHA officials said the changes, which will take effect in a few weeks, should make it easier for borrowers to refinance into more affordable fixed-rate, government-backed mortgages. 

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