HOPE for Homeowners, a federal program to allow the replacement of up to $300 billion in underwater U.S. mortgages with federally backed FHA financing, began accepting applications under a legislatively authorized expansion.
 
To qualify, borrowers must be spending more than 31 percent of their income on mortgage payments. Loans made this year are excluded, except for those completed on Jan 1. Borrowers must have made six months of payments on their loans.
 
Lenders must agree to participate and erase 10 percent of the Home's current value before the government will guarantee the mortgage. A concern among lenders is that investors in mortgage securities must take an immediate loss and can't recoup their lost money if home prices turn upward again.
 
The program is a "helpful step forward" in stabilizing the housing market and will help keep many families in their homes but it is not a cure-all, said Steve Preston, secretary of the U.S. Department of Housing and Urban Development, which administers the program.
 
Troubled borrowers should contact their lenders.

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