WASHINGTON — During yesterday's session of the Financial Services Committee Commissioner Brian D. Montgomery made an unexpected announcement of the expansion of its FHASecure program, saying it will help more homeowners who are struggling to keep up with mortgage payments on high-cost subprime loans. The expansion would help about 500,000 families to refinance into prime-rate FHA-insured mortgages by the end of this year. "We want to be able to help families who are in the right house, but the wrong mortgage," said Montgomery.

The FHA expansion means that the agency will be more flexible with borrowers who have fallen behind on several payments (as many as three) allowing them to qualify for a new federally-insured loan at the maximum 97% of value.

The announcement took Committee Chairman Barney Frank (D-Mass.) by surprise, as he stated that his own plan (under discussion) would help as many as 1.5 million borrowers. Frank also noted that the Bush administration and many Republicans on the Committee were opposed to offering such help to distressed homeowners on grounds that it was too much meddling in the markets from government.