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HUD No. 10-190
HUD Public Affairs
(202) 708-0685
FOR RELEASE
Tuesday
September 7, 2010

FHA SHORT REFINANCE OPTION NOW AVAILABLE
Effort designed to encourage principal write-downs for responsible borrowers

WASHINGTON – In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today will begin providing an additional refinancing option for underwater borrowers.

Originally announced in March,
http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-058 , this enhancement of Federal Housing Administration (FHA) refinance program will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lien
holders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.

The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth – also known as being ‘underwater’ – because their local markets saw large declines in home values.

As announced earlier this year, this change as well as other programs that have been put in place will help the Obama Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.

Participation in FHA’s short refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under
standard FHA underwriting requirements.

The property must be the homeowner’s primary residence and the borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance.

 In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent and a combined loan-to-value ratio no greater than 115 percent.

To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens.

To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.

For more information on FHA Short Refinance option, read FHA’s mortgagee
letter.
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-23ml.pdf

HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving
quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business.

More information about HUD and its programs is available on the Internet at www.hud.gov and
espanol.hud.gov.

 http://www.addthis.com/bookmark.php?v=250&pub=xa-4aaa9fbe130980b4

Making Home Affordable  <http://www.makinghomeaffordable.gov>

Help for America’s Homeowners   <http://www.makinghomeaffordable.gov>
HUD Implementation of the Recovery Act  <http://www.hud.gov/recovery>

HUD.GOV/Recovery  <http://www.hud.gov/recovery>

Federal Housing Administration Insuring More Than 37 Million Mortgages Since 1934

http://portal.hud.gov/portal/page/portal/HUD/federal_housing_administration
http://portal.hud.gov/portal/page/portal/HUD/federal_housing_administration

Public and Indian Housing Ensuring safe, decent, and affordable housing 

<http://portal.hud.gov/portal/page/portal/HUD/program_offices/public_indianhousing>

Please refer all financial and mortgage questions to your financial and mortgage provider.

For real estate questions, contact us at Info@MetroRealtyphx.com or 602.687.9933.

Unless you have been left with truckloads of money by your deceased Uncle Sal, you will need to pay a down payment and get a mortgage.

A down payment is a percentage of the total purchase price of the home. The mortgage loan is the money used to cover the rest of the expense of buying the home.

Mortgages work as follows:

  • Loan: A lender, such as a bank, agrees to lend the home buyer an amount equal to the difference between the down payment and the full purchase price of the home.  The amount of the loan is called the pricipal.  If a home costs $100,000 and the buyer pays a 20% down payment of $20,000, the pricipal is $80,000.
  • Repayment: The buyer must repay the lender over time through monthly mortgage payments. These payments typically pay down the principal plus interest. If the buyer fails to pay the mortgage, the lender can foreclose on the house, taking it back from the buyer.

Frequently, lenders today expect a 20% down payment of the total purchase price. Ask your mortgage adviser if there are any special mortgage programs available to first time homebuyers. Some first time homebuyers are eligible for a FHA (Federal Housing Administration) loan. These types of loans require down payments of just 1-3%. Talk with your lender, find out your best options, and you will better informed of the type of loan that best suits you.

For any questions on mortgages or financial matters, consult your mortgage and financial adviser.

For any other real estate questions, contact us at Info@MetroRealtyphx.com or 602. 687.9933.

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