The Mortgage Bankers Association (MBA) is trying to get the Obama administration interested in a bifurcated refinancing program that the Treasury Department could implement using funds for the Troubled Asset Relief Program (TARP).

The MBA program would allow borrowers who are underwater and cannot get help any other way a chance to obtain a new affordable mortgage with a 90% loan-to-value ratio.

The government could probably sell the first mortgage but it would end up holding a second mortgage with little or no equity. The second lien would have priority over all other second liens under the MBA concept, and it would be payable on the gain from any future sale or refinancing.

"It is geared toward borrowers who have the income and capacity to make a reduced payment," said MBA senior vice president Steve O'Connor. But it is also designed for borrowers who cannot qualify for a loan modification or regulator refinancing because of negative equity or the servicing and pooling agreement, he said.

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