We’ve all watched as program after program rolls out of Washington for those hapless homeowners who can’t make their mortgage payments. And we’ve all seen or heard stories about people who simply stop paying their mortgage and walk away from their obligations. Where’s the help for the myriad homeowners who continue making payments on a mortgage that exceeds their home’s value? It’s finally here – if you qualify.
According to HUD’s recent press release, The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth – or ‘underwater’ – because their local markets saw large declines in home values. The program – originally announced in March – is designed to help homeowners with negative equity refinance into a new FHA mortgage – one that would be less than the current value of their home.
Unlike previous programs that modify loans by doing things like lowering interest rates and extending mortgages, this one is designed to reduce mortgage balances. In short, qualifying underwater homeowners could once again resurface.
“We’re throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined,” said FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”
According to research firm CoreLogic, as of June 30, about 23 percent of mortgage borrowers nationwide owe more on their homes than they’re worth. And in some parts of the country, it’s much worse: In Nevada, 68 percent are underwater, in Arizona, 50 percent, in Florida, 46 percent, and in Michigan, 38 percent.
The main problem with the program – one that will prevent many homeowners from making it work – is that bank participation is entirely voluntary.
Want to know if you qualify? Subscribe to the blog, the answers as to who qualifies and the steps to seek assistance are coming next………..