The latest bill would allow lenders to reduce their exposure to foreclosures if they agree to cut the outstanding balance of an existing loan, thus allowing homeowners to refinance into a new loan that would be FHA insured. The reductions taken by lenders are substantial and must be based on new appraisals that should reflect current home pricing levels.
The Bush Administration has opposed the legislation even though Senator Frank Barney included two measures near and dear to the president's heart - a revamp of the FHA and greater government control over Fannie Mae and Freddie Mac.
