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Can't make your mortgage payments? If you're one of the 9 million Americans with an FHA loan, you could be a candidate for a temporary bailout.

The Federal Housing Administration does indeed have a heart, contends John Bryan, who heads the collection department for Paine Webber Mortgage Finance Inc., which makes FHA mortgages in five East Coast states.Bryan recalls how a duplex owner who was seriously injured in a car accident was allowed to make reduced mortgage payments until he could return to work. The happy ending: The arrangement allowed him keep his home.

``They're pretty flexible,' Bryan says of FHA officials.

More than 40,000 Americans are benefiting from a little-known FHA program that gives borrowers in temporary financial straits the right to reduced payments and stretched-out mortgage terms until they recover.

Through the ``assignment program,' FHA is empowered to take over your mortgage, cutting your payments to as little as zero for as long as 36 months. It can also extend the term of your loan by as long as 10 years, says William Galvin, a spokesman for the U.S. Department of Housing and Urban Development in Washington. HUD oversees FHA.

But you won't qualify if you cannot ultimately pay the government back, Galvin explains. ``This is not a subsidy. There's no appropriation from Congress for this.'

Don't expect a bailout if your problem is attributable to your own bad financial habits, such as a strong tendency to patronize the local mall, amassing credit card debt. Overextension is not a good enough reason for a bailout.

``The default must be due to circumstances beyond your control,' says Brian Chapelle, a vice president at the Washington-Based Mortgage Bankers Association of America.

Still, a majority of the borrowers who slog through the application process, meeting FHA's deadlines and providing the documents it demands, get help. Of those, most have convinced FHA that they could not make their mortgage payments because of problems on the job, divorce or an emergency expense, such as a big medical bill.

Remarkably, you may even base your case for help on being fired from your job or pressured to resign. Or you could qualify because of major, unexpected and expensive home-improvement expenses, such as replacing a furnace.

Major auto repairs also might qualify, but, as one HUD official notes, ``It's not enough to show you bought four mag wheels when standard equipment would do.'

Besides proving that you were hit with circumstances beyond your control, the biggest stumbling block for most applicants is that you must show that you will make good on your mortgage in the future. The idea here is to demonstrate you have serious prospects of solving your financial problems, whether through a new job, retraining, rehabilitation or other means.

The other criteria for the program aren't usually hard to meet. Your mortgage must be three or more months delinquent at the time you apply. Your lender must have sent you written notice that it intends to foreclose. And the property must be your primary residence, not an investment property.

``The program isn't designed to help investors. It's designed to help individual homeowners who have experienced a default through some type of traumatic or tragic circumstance,' says a HUD official.

The FHA assignment program is not the only way FHA borrowers can avert foreclosure. Although they are government-insured, FHA loans are made by private lenders. And a lending institution itself can recast the terms of an FHA loan, points out Chapelle of the mortgage bankers association.

``If you're in trouble, contact the lender. The best defense is a good offense,' he says. ``Once you get behind inextricably, there isn't going to be as much interest in helping you out.'

However, even before your lending institution notifies you of its intent to foreclose on your FHA mortgage, you may wish to look into the assignment program.

Your lender must notify you of your right to apply for the assignment program and will take your application for help. But even if the lender believes that you are not qualified, you're entitled to apply directly to your local FHA office. The FHA is allowed no more than 90 days to process your application for the assignment program, and processing typically takes 60 days.

Keep in mind that the FHA is strict about the document and deadline requirements it imposes on applicants. When applicants are rejected, it is usually because they did not get the right documents in on time.

If you succeed in convincing FHA that you need more lenient loan terms, your mortgage will be taken over by HUD and you will wind up making your reduced or postponed payments directly to the government.

Yet even if you are turned down, all may not be lost. As long as your application is under review, your lender is barred from proceeding with foreclosure. That could give you the time you need to get your financial affairs in order to retain your house.

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