For two years, Ideal Mortgage Bankers Ltd. has been using television infomercials and a toll-free number to market fixed-rate Federal Housing Administration refinancings as a way for homeowners to escape escalating adjustable-rate mortgage payments.

Now the Melville, N.Y., lender, which uses the brand name Lend America, is trying to reach troubled borrowers another way: through the holders of their current mortgages, who also worry about resets and want the loans refinanced.

Lend America said this week that it is marketing its services to Wall Street firms and hedge funds holding ARM portfolios. Such loans are hard to sell right now, so helping borrowers refinance is one of the few ways investors can cash out.

"Wall Street needs solutions because everything has seized up," said Michael Ashley, Lend America's chief business strategist. "They come to us and we contact all the performing mortgage holders and offer to refinance borrowers who may be upside-down on their mortgages. We can take them from an ARM to a 30-year fixed and knock money off their principal."

But the FHA "is not bailing out these hedge funds," Mr. Ashley said. The original sellers of such distressed loans — large banks and Wall Street investment firms — have already "taken the loss," by unloading their portfolios at deep discounts, he said.

Since hedge funds and other buyers of "scratch-and-dent" loans typically purchase portfolios at pennies on the dollar, they have enough wiggle room to forgive a portion of a borrower's debt or waive prepayment penalties, Mr. Ashley said.

The FHA is one of the "vehicles to get the economy going," he said.

(The housing legislation enacted this year calls for the FHA to provide $300 billion of refinancing assistance to borrowers who owe more than their homes are now worth.)

The direct-to-investor strategy is not new. National Bank of Kansas City, a $963 million-asset Overland Park, Kan., unit of Ameri-National Corp., began approaching noteholders in May, identifying current borrowers with ARMs that could be refinanced into FHA loans.

In April, Agire Mortgage Corp. of Orange, Calif., began marketing the services of its advisory unit, Edge Mortgage Advisory Corp., to hedge funds and financial institutions. One of those services helps refinance borrowers into FHA products by contacting the borrowers and determining their eligibility.

James Frischling, Agire's co-president, said Lend America is trying to "close the circle" by going directly to both consumers and investors.

"Just having the borrower say they want to be part of a HUD loan does not determine that a new loan is going to get issued," he said. "It's not that easy."

Simply reaching troubled borrowers is still one of the biggest challenges, Mr. Frischling said, and "once you reach them, you have to figure out if refinancing is even an option."

Less than 10% of the loans "are going to prove to be refinanceable," he said, and investors still need to get information on the other 80% to 90%.

Mr. Ashley estimated that 20% of the borrowers in distressed portfolios are current on their ARMs and qualify for FHA refis.

A former race car driver, he said he changed Lend America's business model in 2006 after realizing "the subprime market was not good for the consumer" and "the bubble was ready to burst."

The privately held company bought the toll-free line 1-800-FHA-FIXED and started the direct-to-consumer channel. Over the last two years its work force has more than doubled, to 550. According to the company, production volume more than doubled from a year earlier in the first half, to $721 million.

In June the company, which is licensed in 42 states, became an approved issuer of mortgage-backed securities guaranteed by the Government National Mortgage Association. Mr. Ashley said this lets it bypass large loan aggregators and perform its own underwriting rather than use the aggregators' minimum credit score, typically 580.

Lend America stopped originating loans through brokers in August. "I don't think the risk is manageable" in that channel, Mr. Ashley said.

For its newest channel the company took out a full-page ad Wednesday in The Wall Street Journal that stated: "Let the professionals unlock the cash in your mortgage portfolio."

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