WASHINGTON
The Obama administration is trying to jump-start its sputtering attempts to tackle the foreclosure crisis with an effort to assist homeowners who owe more on their properties than their homes are worth.
As of yesterday, the Federal Housing Administration will permit lenders to give these borrowers refinanced loans backed by the government. The lenders will be required to forgive at least 10 percent of the original mortgage amount. Investors who have control over the mortgages as part of their large portfolios will select which borrowers are invited to participate.
The plan was announced in March. Its rollout represents the latest effort by the administration to deal with the housing bust.
The lending industry was ill-prepared for a crush of distressed homeowners, the economy worsened, and millions of homeowners had taken on so much debt that their financial woes have been nearly impossible to resolve.
Nearly half of the 1.3 million homeowners who have enrolled in the Obama administration's main mortgage-relief program have already fallen out over the past year.
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