All the recent news reports I've been reading warn of a new batch of repossessions coming. This is because less than half of the homeowners trying to refinance or arrange better terms under the government's so-called 'Making Home Affordable' program have given up...wrapped in rolls of red tape and frustrated by delays.
Now FHA has announced a Short Refinance Option to help Borrowers with negative equity.
In an effort to help responsible homeowners with negative equity...the 'Underwater Group'...HUD this week announced details on adjustments to the refinance program that it unveiled earlier this year. This new program will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth.
Starting in September, FHA will offer certain non-FHA borrowers who are current and in good standing on their existing mortgages and whose lenders agree to write off at least 10 percent of the unpaid principal balance of the first mortgage, a chance to qualify for a new FHA-insured mortgage. The FHA Short Refinance option is targeted to help borrowers who have underwater mortgages because their local markets saw major declines in home values.
On the surface, this sounds like a good idea, but the long list of requirements on both the lenders and the borrowers may create another paperwork morass that puts us no closer to the government's goal of a stable real estate market by 2012.
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