Presidential candidates John McCain and Barack Obama envision the Federal Housing Administration backing new, cheaper mortgages for distressed homeowners who otherwise would have difficulty refinancing into more secure government-insured loans with lower monthly payments. For the plans to work, lenders would have to be willing to take a substantial loss by reducing the amount owed on the loan in the hope they could recoup more money through refinancing than through a costly foreclosure and resale.

McCain:

_ To be eligible for the FHA-insured mortgages, certain borrowers who live in their homes must prove creditworthiness at the time of the original loan and that they can meet the terms of a new 30-year fixed-rate mortgage.

_Separately, McCain wants the Justice Department to create a task force to investigate potential criminal wrongdoing in the mortgage industry.

Obama:

_To be eligible for FHA help, people do not have to have good credit to qualify as long as they can show they are able to afford the new payments.

_Separately, Obama would create a 10 percent mortgage credit for people who do not itemize their taxes.

_Supports changing bankruptcy laws so that homeowners going through that process can renegotiate terms of their mortgages _ just as people or investors who own multiple homes or vacation homes can do.

_Would take steps to combat mortgage fraud and improve mortgage disclosure.