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Government Underwater Homeowners Secure Refinancing Plan

According to a report in the Wall Street Journal, federal housing officials are working with some of the nation's big banks on a plan that would make refinancing loans available to homeowners who cannot qualify through traditional avenues because their homes are worth less than they owe on their loans. Underwater homeowners would have to be current on their payments to qualify, and their mortgages would have to be held by a participating banks, the report said.

There are currently millions of American homeowners who, because of falling values over the last couple of years, are "underwater" on their mortgages, meaning the outstanding balance of the loan is more than the value of the home. Officials want to include the refinancing plan as part of a settlement with the nation's five largest mortgage servicers over improper foreclosures. Those lenders include the nation's four largest banks: Bank of America, JP Morgan Chase, Citigroup and Wells Fargo, plus Ally Financial.

The officials have not offered estimates for how many borrowers might qualify for the plan, as negotiations are ongoing and the final structure of the plan has yet to be determined. Talks are expected to continue this week, so officials from the five lenders have declined to comment.

October 23, 2011

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