Refinancing Throws a Lifeline to Underwater Mortgages

The long-awaited rules that will allow homeowners with underwater mortgages to refinance using Federal Housing Authority (FHA) loans were finally announced by the FHA in a letter to mortgage servicers on Aug. 6. These loans will allow underwater borrowers to refinance to an affordable FHA loan. Potentially 20 million homeowners may fall into underwater status by 2011, so the FHA could end up with a lot of underwater mortgages. If your house is underwater and