Mortgage Foreclosure & Refinance Resource

The study circulated within the American Securitization Forum says more than 600,000 troubled homeowners could win new mortgage terms if Federal Housing Administration loosened the terms for some of its progams. A wave of foreclosures could be prevented if the largest federal home-ownership program were open to more delinquent U.S. borrowers according to a study.

Specifically, the document suggests the FHA loosen its ‘FHA Secure’ program to aid not just adjustable-rate mortgage holders but borrowers with fixed rates and those who have shown an ability to make steady payments even if they have become severely delinquent in recent months.

In late August, the White House announced that borrowers who have missed payments since their interest rate has climbed could qualify for refinancing under the FHA Secure program but the effect of that effort has been limited so far.

The new plan was conceived by an American Securitization Forum member and the group’s staff believe it “merits serious consideration” as a way to prevent more fallout from the U.S. subprime mortgage crisis, the memo said. It would open FHA Secure to borrowers who became delinquent for any reason and who made any six monthly payments since the loan was originated and three timely payments after the rate adjustment.

The current FHA Secure program is only poised to help around 44,000 subprime borrowers, or 5 percent of those who are more than two months behind in their payments. The new guidelines would reach 607,000 subprime borrowers, or 68 percent of those who are severely delinquent.

A spokesman for the Department of Housing and Urban Development, which oversees the FHA, said on Sunday the agency is “continuing to look for additional ways to help more families stay in their homes” and enhance its foreclosure-prevention efforts.