According to the Wall Street Journal, the Bush administration is going to announce an expansion of the FHA Secure Mortgage program that is aimed at helping more homeowners who are struggling with their mortgages.

According to the Bush administration, the FHA Secure Expansion program will be announced Wednesday and is designed to help about 100,000 homeowners, including many who owe more than their houses are worth, reduce their monthly payments. The expansion will involve getting lenders to write down the value of the loans, and in return, shift the the risk of default to the government.

According to the article:

The expansion would allow the FHA to insure a new mortgage if a lender voluntarily writes down the mortgage principal to a maximum of either 90% or 97% of the new value, depending on the borrower’s risk profile. If a loan and home was originally valued at $110,000, for example, and fell to $100,000, lenders could reduce the principal to either $97,000 or $90,000 to qualify for FHA insurance.

Borrowers can qualify if they had some late payments over the previous year, but are otherwise reliably creditworthy and want to remain in their homes. Existing FHA underwriting standards still apply, and the home must be owner-occupied, so speculators, high-risk borrowers and owners of vacation homes wouldn’t be allowed.

The official announcement is expected from an administration official during a congressional hearing held by House Financial Services Committee Chairman Barney Frank, the Massachusetts lawmaker who is an architect of the main Democratic plan. As soon as it becomes available, I will keep you updated.

Call me anytime with questions.

–Tammy