The Obama administration will announce on Friday a broad new initiative to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.
The escalation in aid comes as the administration is under rising pressure from Congress to resolve the foreclosure crisis, which has put millions of Americans at risk of losing their homes. But the programs are likely to spur protests among those who have kept up their payments and are not in trouble.
A major element of the new program, according to several sources who spoke on the condition of anonymity, will be to encourage lenders to write down the value of loans for borrowers in modification programs. Until now, modification programs have focused on lowering interest rates.
Another major element will involve the government, through the Federal Housing Administration, refinancing loans from borrowers whose home’s value has sunk below what they owe on it. More than 11 million homeowners are in this position, known as being underwater. That aspect of the plan would apply even to borrowers who have not fallen behind in their mortgage payments.
The investors who own the loans would have to swallow losses but would probably be assured of getting more in the long run than if the borrowers went into foreclosure. The F.H.A. would insure the new loans against the risk of default.