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Short Refinance Program Initiated

September 10, 2010 By

In an article on the CDPE Blog this week… A Short Refinance Program has been Initiated!

What this means to you is that – In an effort to help homeowners who owe more on their homes than they’re currently worth, the government will initiate its “short refinance” program on Tuesday, September 7, 2010.

According to an August 6 Mortgagee Letter released by HUD (click here to download the entire letter), the program will allow “borrowers who are current on their mortgage to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent.”

While lender consent is required and program participation voluntary, the FHA has stated the program could modify between 500,000 and 1.5 million upside-down mortgages.

Following are a few of the eligibility requirements detailed in the Mortgagee Letter:

Homeowner must have negative equity, be current on the existing mortgage, and have a FICO score greater than or equal to 500
It must be for the homeowner’s primary residence
Existing loan can’t be FHA-insured
First lien holder must write off at least 10 percent of the unpaid principal balance
Refinanced mortgage must have a loan-to-value ratio (LTV) no greater than 97.75 percent
Second liens must be re-subordinated so the new loan does not exceed a combined LTV of 115 percent
Because of this last requirement, this program may have difficulty when confronted with situations involving second lien holders.

While this is great news… it’s still going to take some time to get everything rolling. Your thoughts???

Filed Under: Selling your Home, Short Sale Updates, What's New?

About Jeffrey Simons
For the last 14 amazing years, I have consistently helped entry level buyers, distressed homeowners (short sales) and move up home owners as a trusted adviser. I work with a highly competent, high tech, focused group of business professionals which include a very knowledgeable mortgage consultant offering 29 years of expertise and experience, a tenacious escrow officer, the most experience title representative I have ever met, in addition to an extremely well rounded inspector, a real estate appraiser, and an incredible transaction coordinator. My teams ultimate and only goal is to make your move enjoyable and memorable. I specialize in Anaheim Hills and the surrounding cities throughout the magnificent communities of North Orange County.

Comments

  1. s2kreno says:
    October 5, 2010 at 6:42 pm

    It will never happen. Yeah, Mr. Lender, we want you to get rid of the only money-making loans on your books — the ones with homeowners paying above-market rates because they can’t refi — the loans with borrowers who aren’t in default –.and take a big hit. We want you to exchange the possibility of loss for the certainty of loss. Who comes up with this stuff?! No wonder not a single lender has opted into the program as far as I can tell. Fannie and Freddie sure haven’t.