FHA Short Refinance Program

Effective September 7, 2010 homeowners who qualify can apply for an FHA Short Refinance. Here are some of the requirements.

1. Home must be worth less than the current mortgage
2. Current mortgage must be Non-FHA
3. Homeowner must be current on their mortgage
4. Homeowner must have a credit score of 500+
5. Property must be primary residence
6. This program is voluntary and must be agreed upon by All lien holders
7. First lien holder must agreed to write off at least 10% of unpaid balance
8. Loan to value ratio to be no more than 115%

Just as with the many other homeowner assistance programs, the banks are not required to participate.Another drawback is the second lien holder. They have been responsiblefor many short sales and loan modification failures. They too are notrequired to participate.

I heard about this program late lastyear. A few lenders were already offering the program. However, when Iasked for details, they admitted very few homeowners were eligible. Inaddition, reducing a principal 10% is hardly a source of relief forthose who bought between 2001-2007 in Riverside County, CA. Thoseprincipals would have to be reduced around 50% to be of value.

Iwish I could be more optimistic, but I see another government sponsoredprogram that is complicated, hard to qualify for, and once againprolongs the inevitable.
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