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.
The Federal Housing Administration will allow lenders to give these borrowers refinanced loans if the lender agrees to forgive at least 10 percent of the original mortgage amount.
The plan, which was announced in March, is being made available starting Tuesday.
The FHA said in a document published last month that between 500,000 and 1.5 million homeowners are projected to be helped.
However, the Obama administration’s previous efforts to stem foreclosures have fallen far short of expectations. Analysts at Barclays Capital estimated last month that the refinancing program would only aid between 200,000 and 300,000 homeowners.
As of the end of June, there were 11 million U.S. homes, or 23 percent of those with a mortgage with so-called underwater mortgages, according to real estate data provider CoreLogic.