The Federal Housing Administration (FHA) is making some changes to its existing refinancing
program guidelines to allow more lenders to perform mortgage principal write-downs for
underwater homeowners in mortgages not currently insured by FHA.
These adjustments provide more opportunities for qualifying mortgage loans to be responsibly restructured and refinanced into FHA loans as long as you are current on your mortgage and the lender or investor writes down the unpaid principal balance of your mortgage by at least 10 percent of the original first lien.
A second lien write-down program will be paired with these changes to encourage further write-down of second liens such that total mortgage debt (first and second liens) is no greater than 115 percent of the current value of the home.
The Fine Print
This is a voluntary refinancing and lenders must agree to the writedown. However, the new FHA refinance option is only available to responsible homeowners who are current on an existing mortgage that is not insured by FHA.
You must occupy the home as your primary residence and have to meet FHA standard documentation and other underwriting requirements.
All homes will be appraised to determine current market value. The LTV loan for the new FHA loan must be no greater than 97.75% of the appraised value of the home.
The FHA is moving to implement this as quickly as possible and expects lenders will begin
making decisions by the fall.
Your lender is supposed to notify you if you’re eligible for the program, but I’d call them and ask if you think you might be.
What if I Already Have a FHA Loan?
FHA-insured borrowers are currently eligible for extensive loss mitigation assistance to prevent
foreclosure and make mortgage payments more affordable. FHA is currently prohibited by
statute from offering explicit principal forgiveness to FHA-insured loans.
Where Can I Get More Information?
- The new Making Home Affordable Consumer FAQ
- The HAMP Improvement Fact Sheet
- The HAMP Improvement Example Sheet (very instructive and helpful!)
- The FHA’s National Servicing Center
- Sign up for Truth in Foreclosure updates below
April 1st, 2010 at 7:54 am
refinanced into FHA loans as long as you are current on your mortgage. THAT’S NO HELP WHEN MOST PEOPLE ARE BEHIND ON MORTGAGE PAYMENTS. OR ON A FORBEARANCE I HAVE BEEN ON A FORBEARANCE FOR 4 1/2 YEARS AND NEVER BEEN LATE.BUT ACCORDING TO OCWEN THEM ON TIME PAYMENTS DON’T COUNT WHEN ON A FORBEARANCE. YOU ARE STILL CONSIDERED LATE.SO OTHER MORTGAGE COMPANY’S WONT TOUCH YOU AND OCWEN CAN KEEP GETTING $53 A MONTH LATE FEES. YES THAT’S OCWEN RITE THERE TO KICK YOU WHEN YOUR DOWN.