This week, a new federal loan modification option went into effect that is aimed at helping people who are underwater with their mortgages – but who are still current on their payments.

The Federal Housing Administration’s Short Refinance Program is intended to bring the homeowner’s principal loan balance more in line with the current home value, according to LendingTree News. This would be done by refinancing the mortgages to a lower FHA-insured mortgage. The FHA estimates that between 500,000 and 1.5 million borrowers could benefit from this new program. In general, those who qualify will be people who have been turned down for loan modifications because they can still afford payments, even though their property may be worth less than the loan amount. In some cases, these are “interest only” loans that will balloon with higher payments in upcoming years.

Here is a list of some of the eligibility requirements for the …

Exploring what kind of role the government should play in the troubled housing finance system was the focus of a U.S. Treasury-HUD conference yesterday. That may sound pretty wonk-ish, but the evolving answers carry wide implications for home ownership and a stable housing market.

The New York Times reported that the Obama Administration appears to be focusing “largely on drafting a new and improved version of the current system.” That would mean the government continues to subsidize mortgage loans made by private companies. One proposed scenario is a system in which private companies would provide a greater role in funding home loans while at the same time leaving room for the government to step in to keep things calibrated, according to The Washington Post.

To be determined is the future of Freddie and Fannie Mac. The private entities  guarantee most new home loans but they  suffered from losses due …

The federal government wants us all to get smarter about how we spend and save our money. So, a new Office of Financial Literacy – part of the newly-signed financial reform bill – will develop programs meant to educate the American public on savings and loans.

The office is expected to create standards for financial advice programs and to help people find ways to avoid financial scams. Financial literacy is being promoted separately by other groups, too. The LendingTree Foundation, for example, is a recently-created non-profit organization that provides counseling to families in financial turmoil.

In Washington, D.C., Michael Barr, Assistant Secretary for Financial Institutions, told us in a phone press conference yesterday that the government’s financial literacy outreach is meant to help “individuals take the necessary steps to make themselves better educated about what it means to save and borrow, and to conduct the basic transactions in life.”

The attention on …