FHA has a short refinance program. This program is available for borrowers who are current on their loans and owe more than their properties are worth. It must be for homes that are considered their primary residence. It is intended only for people with non-FHA loans and the borrower must have a credit score of at least 500.
If a borrower is underwater, the bank or investor that owns the loan must agree to reduce the loan balance by at least 10% so that the new loan is no more than 97.75% of the home’s current value. If the bank/investor is willing to take the loss, the borrower must agree to refinance into an FHA-backed loan at the current interest rate.
This program will allow a larger number of homeowners to stay in their home, where otherwise they may have walked away, tried to sell as a short sale, or even gone into foreclosure.
Tammy Hayes, Realtor, Sandals Realty, Punta Gorda, FL email@example.com