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Banks May Allow Homeowners To Swap Mortgages

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Oct 1, 2008 12:41 pm US/Eastern

Banks May Allow Homeowners To Swap Mortgages

WASHINGTON (AP) ― The government is kicking off a program that aims to prevent foreclosures by letting an estimated 400,000 troubled homeowners swap their mortgages for more affordable loans.

Lenders, rather than borrowers, will decide whether to participate in the program, which requires them to take a loss on the initial loan.

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.

"For homeowners in trouble, this may be the help they need," Housing and Urban Development Secretary Steve Preston said Wednesday.

(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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