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Find assistance with a Short
Refinance
The FHA short refinance is not something that is new – in fact, many
loan officers have figured them out, tried them and
simply gave up trying to help people get them done
because it was so difficult to get a lender to agree
to accept a short payoff.
The key to having a successful FHA short refinance
is going to be to get your existing lender to agree
to accept a short payoff. If you get your lender to
agree to a short payoff, one other thing to remember
is that when you participate in the FHA short
refinance program, it could possibly show as a
derogatory item on your credit score as well as have
tax implications. You will want to contact your tax
advisor and be informed of possible credit score
impacts that the FHA short refinance program could
trigger.
In addition, the
existing loan to be refinanced must not be an
FHA-insured loan, and the refinanced FHA-insured
first mortgage must have a loan-to-value ratio of no
more than 97.75 percent. Interested homeowners
should contact their lenders to determine if they
are eligible and whether the lender agrees the write
down a portion of the unpaid principal.
To facilitate the
refinancing of new
FHA-insured loans under this
program, the U.S. Department
of Treasury will provide
incentives to existing
second lien holders who
agree to full or partial
extinguishment of the liens.
To be eligible, servicers
must execute a Servicer
Participation Agreement
(SPA) with Fannie Mae, in
its capacity as financial
agent for the United States,
on or before October 3,
2010. |
Starting September 7,
2010, the Federal Housing Administration (FHA) will
offer certain 'underwater' non-FHA borrowers who are
current on their existing mortgage and whose lenders
agree to write off at least ten percent of the
unpaid principal balance of the first mortgage, the
opportunity to qualify for a new FHA-insured
mortgage.
FHA Short Refinance:
Simple Definition
Recently, FHA (officially) announced that they are
allowing FHA lenders to help borrowers who have
negative equity in their home get a new FHA loan
when the existing lender agrees to a short payoff.
This is known as an FHA short refinance. Just a few
requirements for people to be eligible for the FHA
short refinance program include:
- There must be negative equity
- You must be current on
the mortgage being refinanced
- You must live in the home as your primary
residence
- Your current mortgage being refinanced may not be
an FHA loan
- Your current lender must write off at least 10% of
the principal balance
- The new maximum LTV is 97.75% for the new loan. |
