The U.S. Department of Housing and Urban Development provided more details on President Bush's plan to help delinquent borrowers.
Last week, Bush unveiled FHA-Secure, a modest plan to help borrowers who have good credit but have become delinquent on their mortgage as a result of an increase to their mortgage payments.
The program, which will use risked-based premiums, won't be available to subprime borrowers who bought a home they knew they could not afford, Bush said last week.
In its own statement Friday, HUD said the proposed program will benefit borrowers on around 240,000 mortgages.
The risk-based pricing structure becomes effective Jan. 1, 2008, according to HUD. It is expected to benefit "minorities and first-time homebuyers who have been disproportionately lured into exotic mortgages."
HUD noted a recent increase in conventional borrowers refinancing into FHA-insured loans.
"The number of these refinancing transactions has tripled since the start of 2006," the statement said. "FHA's transactions are projected to surpass 100,000 loans by the end of the fiscal year."
And refinances into FHA-insured loans are expected to get a boost from the new program, HUD said.
Qualifying FHA-Secure borrowers must have a satisfactory mortgage payment history prior to increases to their initial payments and no more than a 97 percent loan-to-value, the statement indicated. In addition, their rate must have a reset date between June 2005 and December 2009, their employment has to have been continuous and they need to earn enough to afford the payment.
"FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates," said FHA Commissioner Brian Montgomery in the statement.
In addition to helping delinquent borrowers, the new program is expected to bring liquidity to the mortgage market.