The Federal Housing Finance Agency has approved a rule change that will let members of the Federal Home Loan banks temporarily use set-aside funds to refinance borrowers into low-cost Federal Housing Administration loans.

Members of the 12 Home Loan banks can use such funds to pay closing costs on FHA-approved loans and to reduce the principal balance of refinanced loans below the maximum 90% loan-to-value ratio set by the Hope for Homeowners program, the agency said Wednesday.

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