Refinancing Your Home Can Be an Option Under the FHA Short Refinance Program
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f you are looking to refinance your home and you are underwater with the value of your home, you may now be able to refinance under the FHA short refinance program. There has been talk about ending this program with many other government foreclosure assistance programs, however, it now looks likes lenders will be offering this program as of February 11, 2011.
Federal Housing Administration announced by David Stevens stated 23 approved lenders signed up to participate in the short refinance program. One of the issues with this program not helping struggling homeowners, were the lenders lack or willingness to participate in the program. As many investors would rather foreclose than look at a principal reduction.
The short refinance program was launched in September 7, 2010 although it was available to be used only 44 loans have been modified under it. Part of the problem is the offering has only been available for a few months, because of laying the ground work for this program to be effective and to have lenders up to speed to handle the requests. There are many facets to consider when implementing a new program on such a grand scale. The operational infrastructure must often be developed to utilize this option on the volume that most likely it will need to handle.
David Stevens the Commissioner for the Federal Housing Administration defended the government’s foreclosure programs many facing termination from Republicans who say the programs are too expensive and ineffective. The government’s Home Affordable Modification program HAMP, which is going on its third year is the most targeted of programs the Republicans are criticizing.
The short refinance would work by refinancing homes into an FHA insured loan if the lender or investor writes off the unpaid balance of the original first lien by at least 10%. There are a few requirements in order for you to be eligible, the most important I think is you have to be current, cannot already have an FHA loan, maximum loan to value cannot exceed 97.75% and you must have a 500 credit score.
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