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September 28th, 2010

Little interest in FHA Short Refinance program



“All I want is the opportunity to refinance.” That’s the overwhelming message we’re hearing from underwater borrowers.

Until now, negative equity has denied underwater borrowers the opportunity to refinance. On August 6, the FHA announced a program — the FHA Short Refinance option — that’s designed to help these borrowers refinance. However, many critics (including us) feel as though the FHA’s strategy will cause the program to fall well short of the lofty goals it set out.

Why? The main reason is due to the fact that lenders are required to reduce a borrower’s principal by at least 10% right off the bat.

Apparently the fear of another failed housing preservation program has reached the White House. Reports earlier this month suggested that officials were going to meet today to discuss the FHA’s Short Refinance plan so they can avoid the same trappings that have crippled the effectiveness of other similar programs, such as HAMP and HARP.

According to an article this week in the Reno Gazette-Journal, most of the country’s largest mortgage lenders haven’t yet shown much of an interest in the FHA’s plan:

Among the area’s major servicers, Wells Fargo and CitiMortgage said they still are navigating the new program and have yet to decide whether they will participate.

JP Morgan Chase said it will not be participating in programs that fall outside of the Treasury Department’s Home Affordable Modification Program, HAMP.

Bank of America could not be reached for comment, despite repeated attempts.

In addition to the lack of interest being shown by lenders, some experts are saying that some borrowers are a) showing very little interest at the moment; and b) flat out won’t qualify:

The government is estimating anywhere from 500,000 to 1.5 million homeowners could be helped by the new program. Analysts at Barclays Capital estimated last month that the refinancing program would only aid between 200,000 and 300,000 homeowners.

It stands to reason that this information has reached those in Washington and that’s likely why officials are planning to meet to discuss if this program is really the optimal solution to help the nation’s overwhelming number of underwater borrowers.

HSH has devised our own plan to help underwater borrowers. Unlike the FHA’s program, it doesn’t penalize lenders, and any cost that accrues to the government may lessen over time. Our plan is designed for homeowners like Sara Timmons who want to stay in their home for the long haul, and merely want the opportunity to take advantage of this low-rate environment:

“We don’t want to move out of our home,”  [Timmons] said. “We bought a home to live in, not to invest in. But it’s hard to enjoy that when you’re always stressing about the money you’re putting into it.”

“I’m not trying to get something for nothing,” she said. “We just want something to give us a little bit of relief right now so we don’t feel like we’re struggling all the time … refinancing would be amazing.”

It’s likely going to be a while before we have another update on how the FHA Short Refinance plan is fairing. Hopefully, we’ll have an update for you sooner if officials meet today to discuss any change in the strategy for helping the nation’s underwater borrowers.

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62 Responses to “Little interest in FHA Short Refinance program”

  1. palfa Says: September 28th, 2010 at 3:06 pm

    In addition to homeowners who are “underwater”, there are many who want to stay in their homes and are current on payments, but have seen their equity drop from 20% to something less. They are also stressing about their situation, but cannot refinance because of the equity issue. This issue could also be covered by a refinancing initiative if FHA would broaden their reach.

  2. Tim Manni Says: September 28th, 2010 at 3:25 pm


    I hear you, but I wonder, if lenders aren’t very inclined to even help those that are underwater, I bet they would be even less inclined to help those who are not.

    Thanks for your comment, hope to hear from you again soon,

  3. Michael Kent Says: September 28th, 2010 at 4:16 pm

    It seems that all these programs are designed more for the benefit of the banks than the homeowners. They don’t solve any problems, they simply create false hope and drag out the foreclosures at a slower pace. This way the banks can slowly rid their balance sheets of their toxic assets.If everyone walked away from their underwater mortgages at once,the entire banking system would implode. Extend and pretend, delay and pray.


  4. Tim Manni Says: September 28th, 2010 at 4:39 pm

    Hey Mike,

    I hear you loud and clear, that’s why we have largely criticized this FHA short refi program. It’s almost like, why even bother introducing these programs? Did you get a chance to read over our underwater refi plan?

    Thanks for your comment,

  5. Tweets that mention Little interest in FHA Short Refinance program | HSH Financial News Blog -- Topsy.com Says: September 28th, 2010 at 6:46 pm

    [...] This post was mentioned on Twitter by HSH Associates and Heath Lackey, Derek F. Lombard. Derek F. Lombard said: Little interest in FHA Short Refinance program http://ow.ly/2LiQr #in #fha #mortgage [...]

  6. Mark Says: September 28th, 2010 at 9:15 pm

    I am 100% with Sara on this one. I love my home and want to stay here but I cannot enjoy it because I am now 20% underwater and cannot refi out of my 6.625% rate. Unfortunately, my home situation depresses me and stresses me out to the point where I will walk away rather than live in my home and not be able to enjoy life.

  7. Alex Dsouza Says: September 29th, 2010 at 7:04 am

    At time when sentiment of house buyers is low, any such scheme will be futile to attract buyers. BTW, such a scheme benefits banks more than house buyers!

  8. Underwater Joe Says: September 29th, 2010 at 4:22 pm

    I would jump on a plan like the one that you propose in a heartbeat. My home is underwater, but I certainly don’t want to take a credit hit to get out of it. The current short refi plan would cause me to take a negative hit on my credit, and potentially generate a large taxable event due to the write down. It’s all moot anyway as I don’t think my lender (HSBC) would agree to write down a legitimate note that is being paid current. I would be embarrassed to ask them to write it down. I entered into an agreement for the loan and have every intention of keeping my word. Unlike many, my word still stands for something. Give me an opportunity to meet my obligations and get a better interest rate and I will be all over it.

  9. Alan Says: September 29th, 2010 at 6:26 pm

    I actually called Wells Fargo yesterday asking them about this program, it looks like they are participating on this program, the guy was really helpful and seemed to think that I‘d be able to qualify for it, they are even increasing the value to debt requirement from 115% to 125%. He said the application would take 2 weeks, after that it was a matter of getting an appraisal. I guess we’ll see in a couple of weeks…

  10. Paul Says: September 29th, 2010 at 9:51 pm

    You have to be current on your mortgage (presumably) a responsible citizen who seems to be able to afford the mortgage to take advantage of this program. Why would bank want to write off at least 10% of your balance just so you can take your business elsewhere. They’ve just lost 10% of the balance PLUS all the interest that would have been paid to them. Seems like those who qualify for this program are probably the customers they’d like to keep!

    Again, if you are responsible in that you try to pay your bills and you get NO HELP!

    This is a silly program… I don’t blame my bank, Chase, for not taking part in it, what’s the up side for them?

  11. Sandy Says: September 30th, 2010 at 9:39 am

    Yes, BoA flatly said “NO” to me when I tried to get refinanced and asked about this plan. I’m current on my loan, have excellent FICO and this plan would work great for me. But lenders won’t budge.

    I’m waiting for a plan for underwater borrowers like me. But on deaf ears…I would save at least $300-$400 a month if I get refi which I can spend else where to help economy to recover….

  12. Lea Says: October 1st, 2010 at 6:51 pm

    This program is another sad attempt to give good people false hope. My husband and I poured our heart and souls into our home, only to be told well you’re current, get in line! These programs fail because they offer the bank the “optional” phrase. No bank will voluntarily loose money. These will only work if it is required to do this, and they work with borrowers. Not lets make borrowers work for it……I have had hours of converstations with bank employees who adjust my paperwork (LIE) to make things work for them to “pre-approve” me. This goverment need to pull their heads out of their A**’s and listen to the homeowners! If they did, this recession would end a whole lot sooner! Signed….sincerely frustrated “underwater” homeowner

  13. Mark Says: October 2nd, 2010 at 2:22 am

    Just talked to Wells Fargo today (October 1st).
    They told me that WF is still deciding what to do with this program and that it would be a couple months before they made a decision.

    Alan was told a different story that WF is already participating.

    Sounds like we might be getting conflicting information.

  14. Tim Manni Says: October 5th, 2010 at 11:52 am


    You say you love your home and want to stay there. Why would want to walk away? If your current on your payments and can continue to remain so, walking away would just incur a ton a headaches. Home prices will rebound to some degree, and if your house is your home, why walk?

    Thanks for commenting,

  15. Tim Manni Says: October 5th, 2010 at 11:53 am


    Have you read our underwater refi plan? If not, here it is: http://library.hsh.com/articles/refinancing/ValueGapRefi.html

    Thanks for commenting,

  16. Tim Manni Says: October 5th, 2010 at 11:55 am

    You said it Joe! All many borrowers, like yourself, want is “an opportunity to meet [your] obligations.”

    Well said, thanks for commenting,

  17. Tim Manni Says: October 5th, 2010 at 11:55 am


    Well good luck and keep us posted!

  18. Tim Manni Says: October 5th, 2010 at 11:57 am


    Absolutely the qualifying customers would be ones they would want to keep — they’re writing down your principal after all. We don’t blame the banks either, who would agree to losing money off the bat? No one I know.

    Thanks for your comment,

  19. Tim Manni Says: October 5th, 2010 at 11:59 am


    And that’s the point, especially with our underwater refi plan, there’s so much benefit that could come along with borrowers getting a lower monthly rate.

    Thanks for letting us know about BofA.


  20. Tim Manni Says: October 5th, 2010 at 12:05 pm


    “No bank will voluntarily loose money”: you got that right. Have you read our underwater refi plan? If not, here it is: http://library.hsh.com/articles/refinancing/ValueGapRefi.html. If you think it could work, write/call your Congressmen and let them know!

    Keep us posted,


  21. Tim Manni Says: October 5th, 2010 at 12:07 pm


    We’ve heard stories of conflicting servicer info since the first days of HAMP and HARP. I’m not at all surprised.

    Thanks for letting us know, keep us posted,

  22. Raul Says: October 5th, 2010 at 6:55 pm

    Good luck, Alan. What’s the Wells Fargo # you contacted? I contacted their FHA dept at 1-888-367-6663 and was told that Wells Fargo is still deciding.

  23. Don Says: October 7th, 2010 at 2:46 pm

    This program was unlike HAMP or HARP, it was intended to keep people from walking away next year or the year after, so the economy can stabalize. I’m military, next year I get orders and I’m leaving. Wells Fargo can take advantage of the program now, and only eat 10% of the loss (government funds eat 90%, there goes the deficit), or they can find the keys on the counter next year with a note from me saying “betcha wish you’d have done the short refi for me, eh?” I’m like %45 underwater in Tampa, can’t sell it for half what I paid 3 years ago, can’t even rent it. I’m current, on a non-FHA insured loan, so this program is for me. Lots of you have noticed that the only help out there is for people that lost their jobs or took out a risky ARM.

  24. Tim Manni Says: October 7th, 2010 at 4:56 pm

    Hey Don,

    Thanks for commenting. If you’re shipped out, does that mean you have to sell your house? If not, why walk away? If you enjoy your home and can manage your monthly payments, why not stay? Home prices will eventually recover to at least some degree if not substantially. I agree with you, too many programs out there help the delinquent borrower, not the current borrower. That’s why we devised our own underwater refi plan. Here it is: http://library.hsh.com/articles/refinancing/ValueGapRefi.html

    Thanks for you comment, keep us posted, best of luck,

  25. Don Says: October 8th, 2010 at 12:52 pm

    I’ll take a look at your program. I’m getting orders in the Spring, gotta leave next summer, no choice. I like the house, but I can’t sell it and I can’t rent it. Why walker away? Houses like mine rent for $1000 a month less than my mortgage, it’s that bad in Tampa. I’m leaving on military orders, and if they don’t work with me, I’ll just have to take the forclosure. I’m not going to lose $1000 a month plus upkeep for the next 27 years.

  26. Tim Manni Says: October 8th, 2010 at 2:28 pm


    Sounds like you’re in a bind. Well all I can suggest is you check this article out: “The Pros and Cons of Walking Away from your Mortgage” (http://library.hsh.com/articles/homeowners-repeat-buyers/the-pros-and-cons-of-walking-away-from-your-mortgage.html). I wouldn’t want you to think walking away is your best bet when maybe it isn’t.

    Forgetting about a principal reduction for the moment, would you stay if you could simply refinance to a lower rate?

    Good hearing from you again,

  27. Don Says: October 18th, 2010 at 8:46 am

    A lower rate might make my payment go down a little, but not enough to matter. I’m going to have to get out from under the house, one way or the other. When I clicked on the link you posted, the document wasn’t found.

  28. Tim Manni Says: October 18th, 2010 at 9:35 am
  29. Kevin Says: October 19th, 2010 at 10:13 pm

    I just spoke to WF and they said they are still deciding even though last week one of their people suggested I look into it.

    And with their current programs, even if I could refi, I’d have to pay PMI and now my paynent would be greater than what I have now.

  30. Tim Manni Says: October 20th, 2010 at 9:26 am


    Doesn’t sound like much of an improvement to me.

    Keep us posted,

  31. Alex Says: October 23rd, 2010 at 4:29 pm

    I would qualify for this program. We’ve never had a late payment and owe 303K on our house(currently valued at 266K). I called my lender (BOA) and they told me they had no word on whether BOA would partake in the program.

    Why do I have the feeling that this will be their response until eternity regarding the short-refi program.

    If another bank offers the program, would I be able to switch lenders under the conditions of this program? Thanks.

  32. Tim Manni Says: October 25th, 2010 at 8:41 am


    I have a feeling that not many lenders are participating in this program at all. As far I know, there aren’t any restrictions about switching lenders, since the point of this refi program is to move borrowers over to FHA loans anyway. It couldn’t hurt to talk to some different lenders; but I haven’t heard of one lender so far who is actively participating in the FHA Short Refi program.

    Please keep us posted, we’re very interested to hear which lenders are participating, thanks,

  33. Vicki Says: October 30th, 2010 at 10:19 am

    I wonder how mortgage insurance is influencing lenders not to participate in these programs? If they can file claims and collect when a mortgage defaults, aren’t they in a win-win – if the borrower continues to pay they win, if they go into foreclosure and can recover 20-50% of the loan amount, they win. How can a borrower – who is paying the mortgage insurance premium – find out who the PMI is with and how much the coverage is? I understand some PMI companies are working with the borrowers and lenders to try to work something out to try to lessen their loss.

  34. Tim Manni Says: November 1st, 2010 at 1:37 pm

    Hey Vicki,

    “I wonder how mortgage insurance is influencing lenders not to participate in these programs?”: Good question, I’m not exactly sure. I would suspect not much. Instead the lack of participation is rooted in mere design of the FHA Short Refi program.

    Look at it this way: this program is designed for current borrowers. A lender would have to take a current loan that’s paying out at an interest rate higher than today’s record lows, cut 10% off the principal and then take that performing loan off its books and refi it to an FHA loan. The only thing in it for the lender is future peace of mind. The only way they’d refi one of their loans under the program is to think that the borrower, although presently current, might default sometime in the future.

    If the borrower continues to pay, that’s the ultimate win-win. Any other scenario, such as a lender recovering 20-50% of the loan amount, isn’t really a win-win, they just lose less money.

    Only a lender really knows who the borrower’s PMI is with (there are only a handful of PMIs). A borrower can contact their servicer to find out. The servicer won’t know this off the top of their head, they’ll have to do a little research to find out. What do you mean when ask “how much the coverage is”? Do you mean how much of the loan would be covered in event of a failure?

    Thanks for your comment,

  35. Izzy Says: November 1st, 2010 at 5:34 pm

    Talked to Wells Fargo today. They say they are not participating in the short-refinance program. The lady recommended that I call back to check in a month.
    I wonder if they will take this seriously if I start defaulting.


  36. Tim Manni Says: November 2nd, 2010 at 8:59 am

    Hey Izzy,

    Thanks for letting us know. I’d hate to hear that you defaulted just to get their attention…this just speaks to the lack of assistance for current borrowers who just want to refinance.

    Keep me posted, let me know if I can be of assistance,

  37. moon2020 Says: November 12th, 2010 at 5:34 am

    I paid 230,000, put 20% down (no PMI), have paid what’s owed down to 169,000, and my house is worth about 75,000 and still dropping (yes, you read that correctly 75,000 not 175,000). That puts me at ~67% upside down from my original purchase price; and I have paid into my loan just under my home’s current value. I need to move for my job, and I cannot rent my place out for the amount that I pay each month. Thus, most people tell me to walk away.

    Under the terms of the short refi program and what is on my note, I qualify. However, due to the electronic buying and selling system, I have no idea if the original company stated on my note is the entity that owns my note. I suspect that BoA or one of their investors owns it. If BoA twiddles their thumbs on this much longer, my next few mortgage payments will be spent on an attorney doing a forensic audit of my mortgage and original overinflated appraisal.

    Why is every bank decision based on short-term gain versus long-term gain? It is to BoA’s (as well as other banks’) long-term advantage to offer their current paying underwater customers this program: who do they think is going to buy the glut of their foreclosed homes, giving them their future business?

    Until the fed ends the grid-lock by making these programs mandatory for economic recovery, nothing is going to improve: more people are going to default within the next five years (pretty everyone but the super wealthy and those that bought well before the housing boom are going to have poor credit), more jobs are going to be lost, new graduates are not going to find gainful employment, and the US birth rate is going to go down.

    Break out the bulldozers for the dilapidated, empty houses!

  38. Tim Manni Says: November 12th, 2010 at 9:18 am


    Thanks for your comment — sorry to hear about your underwater situation.

    First, at this point, I don’t think it matters who owns your loan, I haven’t heard of one lender participating in the FHA Short Refi program. Second, it’s not that the original appraisal of your house was “overinflated.” As you stated, home prices have fallen tremendously in your area and you said they’re still falling. Where do you live?

    Lenders don’t like the FHA Short Refi program because it requires them to lose a lot of money right upfront.

    Here are a few things to consider. HSH.com developed our own plan to help underwater borrowers refinance, it’s called the Value Gap Refi. You can read about it here: http://library.hsh.com/articles/refinancing/ValueGapRefi.html

    We’re hoping our plan catches the eye of lawmakers. If you agree or like our plan, we encourage to tell your state’s lawmakers about it.

    Also, if you’re seriously considering walking away you need to read this: http://library.hsh.com/articles/homeowners-repeat-buyers/the-pros-and-cons-of-walking-away-from-your-mortgage.html

    I write the above article, it’s called “The pros and cons of walking away from your mortgage.”

    What underwater borrowers really need is two things, the ability to refinance or a principal reduction. To this point, neither have happened on a wide spread basis. What makes your situation especially tough is that you have to move. Your options seem to be getting fewer by the day.

    Best of luck and keep me posted. Thanks again for commenting,

  39. moon2020 Says: November 13th, 2010 at 11:33 am

    I live in Florida, where ~50% of homeowners are upside down on their mortgages and 10% plus of some subdivisions are now empty, non-maintained houses.

    The appraisal was overinflated for the amount of sq ft. It was an all-in-one sale/appraisal/mortgage/title company closing from the builder that was sold to Countrywide, which BoA later acquired.

    I personally know several people who have foreclosed and/or went through short sale: a foreclosure is a 300 to 400 point hit with at least 7 years of bad credit, and a short sale is ~200 point hit with around 18 – 24 months of bad credit.

  40. Don Says: November 16th, 2010 at 3:54 pm

    Been on the road, catching up with the blog. Back on 1 Nov, you posted: “The only way they’d refi one of their loans under the program is to think that the borrower, although presently current, might default sometime in the future”

    I don’t understand why WF or the other major lenders haven’t made some sort of announcement for military. Troops are getting foreclosed on like crazy. Heck, if congress would just agree to eat 100% of the loss for us instead of 90%, we’d be golden, right? Sounds like I need to write my congressman.

  41. Tim Manni Says: November 16th, 2010 at 4:58 pm


    Thanks for following up with me. Do you have a VA loan?

    Haha, yeah I think if “congress would just agree to eat 100% of the loss for us” then no one would be in trouble.

  42. Raul Says: December 1st, 2010 at 3:42 am

    I heard a radio ad today about a principal reduction program through a financial services company called Willow Brook Financial.


    Does anyone know if this is a legit program? Thanks.

  43. Tim Manni Says: December 1st, 2010 at 9:41 am


    Do you live in Canada? According to the website, Willow Brook Financial is located in Ontario. I couldn’t find out any real details about a principal reduction program, especially their “Services” page isn’t even live yet…Truthfully that worries me a little.

    Have you read any news articles about this company or program yet?

    Thanks for commenting,

  44. phillip nuness Says: December 5th, 2010 at 7:32 pm

    i have been trying short sale/refi with boa,since last 13 months,no luck.
    finally i decided to close my savings/cheking account and moved to credit union. i think those all who have mortgage thro boa/countrywide,shoud quit doing business with boa

  45. Raul Says: December 6th, 2010 at 2:52 am

    Hi Tim,

    I live in Los Angeles. The radio ad asks people to call one of their representatives to discuss a principal reduction. There was no indication of a website on their radio ad. I only know about their website because I decided to google the company before I committed to calling one of their agents. I have not yet called them.

    As for the news articles, I not yet read any news about this company. Thanks for the reply.

  46. Tim Manni Says: December 6th, 2010 at 10:14 am


    There’s an army of unhappy BofA customers out there, just like yourself. Hey, if you’re unhappy with your bank, taking your business elsewhere is definitely a good way to show it. Can’t say I blame you at all.

    Thanks for commenting, hope to hear from you again,

  47. Tim Manni Says: December 6th, 2010 at 10:18 am


    Well keep us posted if you call.


  48. Raul Says: December 13th, 2010 at 4:19 pm

    Hi Tim,

    I just spoke with a representative from Willow Brook Financial. They are located in Ontario, California and here is the info I received:

    1) The representative knew nothing about the government FHA Short Refinance Program and were asking me several questions about where they can learn more info

    2) The way they reduce the principal on mortgages is by short selling your home and reselling the home back to you at the short sale amount

    3) The representative was very aggressive and unfriendly and didn’t “want his time wasted”

    4) The representative asked for plenty of personal info before explaining their service

    5) The representative tried selling me on how banks would make 130% on my home through a short sale and therefore I would have no trouble asking my bank for a short sale.

    Does all of this sound legit to anyone?

  49. Tim Manni Says: December 14th, 2010 at 5:27 pm


    1. Yeah, I don’t know of anyone actively participating.
    2-5. Wow, never heard of a bank short selling a property and and then selling it back to that same borrower. I don’t see how they could make 130% on a property that’s underwater.

    I’d live to hear more about this!


  50. Stephen Says: January 7th, 2011 at 10:42 am

    I am a NJ residence who has been trying to find a lendor for the last two months who will participate in this program-I have failed to find just 1 Lendor who will EAT a mortgage, take the loss, and get nothing from the Gov’t for it. There are NONE-I have had 10 lendors tell me that I have two options-Default and risk your credit or just keep paying your mortgage and hope for the best. I am totally disgusted w/ the whole thing~

  51. Tim Manni Says: January 7th, 2011 at 10:49 am


    First off, sorry to hear about your struggles. We haven’t heard of one lender participating either. This idea quickly got swept under the rug, I don’t hear anything about it anymore. We just wish Washington paid closer attention to our idea to help underwater borrowers refinance.

    You can read about it hear:


    I think it may be time to look for other options besides the FHA short refi program.

    Please keep us posted, thanks for commenting,

  52. Stephen Says: January 7th, 2011 at 12:48 pm

    Thank you Tim-After reading the page you suggested, I think the idea is well thought out and probably would assist the majority of the US Citizens that are underwater, as well as avoid major hardship on the lenders. The problem I see, which you already mentioned in your first response, is Washington. In my opinion, the plan places the majority of the risk on Washington’s doorstep, which they will never accept-It is the exact same reason why the FHA Short Refinance had no incentives for the Lender. Granted, I realize that Washington steals millions of dollars from the taxpayers and wastes trillions, and that stopping that issue gives all the money Washington needs to put this plan in effect; but they will never change-They will continue to waste, steal and defer risk, until something dramatic changes in our political system.

  53. Tim Manni Says: January 7th, 2011 at 1:30 pm


    Good to hear from you again. Washington has a decision to make: effectively deal with the underwater population, or face a housing market that will never fully rebound for many years to come.

    What part of Jersey do you live in? Our offices are up north, in Pompton Plains.


  54. Stephen Says: January 7th, 2011 at 2:08 pm

    I’m in the southern part of Middlesex County; Monroe Township/Jamesburg.

    I hear a lot of politicians patting themselves on the back for the HARP and FHA programs, but do they realize it doesn’t help the far majority of the population? Is Washington aware that their programs are not reaching the people and that they need to make further changes b/c it seems like if they are aware, their response is terrible and extremely slow.

  55. Tim Manni Says: January 7th, 2011 at 2:47 pm


    Oh I’m sure they realize their programs aren’t living up to their potential, they’ll just never admit it. Take this for example:



  56. Jared Leichliter Says: January 21st, 2011 at 6:19 pm

    If any of you have a 1st mortgage with CITI Bank that is NOT a Fannie Mae or Freddie Mac loan I can help you with principle reduction to 95% of current market value. There are no upfront fees but you must be current on your mortgage with no 30 day late payments in the last 12 months and be able to qualify for FHA financing.
    We have our own negotiators at Citi and the process can be completed within three months.

    Jared Leichliter
    Steltmen Wholesale

  57. Izzy Says: January 25th, 2011 at 7:08 pm

    Jared, Are you also negotiating with Wells Fargo?

  58. Kelli Swedenskey Says: February 3rd, 2011 at 8:09 am

    I couldn’t be a better candidate for a short refi. Let alone the willingness and eagerness of my current lender. They have been bending over backwards trying to help me keep my home. They have extended my temporary modification for an extra 2 months , twice now. I owe 325,000. They have agreed to accept 225,000 net. Current market value is 242,000 to 257,000. It’s a win, win for both me AND my lender yet I can’t get a lender to do a short refi. I don’t understand the fear the lenders have since they are government backed loans. Surely there HAS to be a handful of lenders out there SOMEWHERE

  59. Lisa Says: February 8th, 2011 at 7:55 pm

    I qualify for the FHA short refinance program. My application to refinance has been stalled since last year because Citimortgage doesn’t participate in the program. (I cannot even refinance at a lower rate under a conventional refi because it would be throwing good money after bad, or under the HARP program for a lower rate because Freddie Mac declined the application because of the way the loan was bundled and sold…I have a conventional 30-year mortgage, so how a mortage is bundled and sold is not under my control and not my problem.)

    I call Citimortage periodically to see if they are now participating. Half the time, their mortgage consultants do not even know what this program is. I have to explain it to them. I called the FHA to ask if any lender has participated in their short refi program. They referred me to their Web site and gave me some run-of-the-mill (useless) information. I still don’t know if any lender has participated in the program. My loan is backed by Freddie Mac so the post by Jared Leichliter at Steltmen Wholesale above wouldn’t help. I am no economist, but it seems to be a no-brainer that the largest asset that a person has is typically their house (i.e, the equity in the house). If the housing market does not stabilize for those underwater in good standing, then consumer confidence will not improve, therefore consumer consumption will not increase,therefore businesses will not flourish and layoffs will continue to rise, therefore the economy will remain stagnant. Cause and effect. It’s not rocket science.

  60. Tim Manni Says: February 9th, 2011 at 9:16 am

    Hey Lisa,

    To be blunt with you, I wouldn’t put any faith in the FHA Short Refi program. I haven’t really heard any successful stories and I know most lenders aren’t even participating.

    Unfortunately, with everything else they’re doing for struggling homeowners, Washington hasn’t yet developed a program to help underwater borrowers refinance.

    I’ll keep you posted if hear anything else regarding the FHA program.

    Thanks so much for commenting,

  61. David Says: March 5th, 2011 at 5:49 pm

    I don’t care about the 10% write off, I just want the opportunity to refinance to a better rate. I can afford my current mortgage and I’ve never missed a payment so what’s the incentive for the lender to work with me.

  62. Rick Says: March 20th, 2011 at 8:00 pm

    My wife and I feel the same as all of you. Our problem is with Wells Fargo and Wachovia. We have a pick a pay mortgage with Wachovia and tried to refinance into a HAMP loan. Well…. when we aplied we were told we would have to escrow with the new loan (we currently don’t). Well…. we applied for the loan, they set up an escrow acct. called my county about the taxes and saw that they were not fully paid because we pay in 2 installments (Jan. 31/ July31) Wells Fargo Paid my taxes in full and then I was informed by Wachovia my loan was disapproved and now I am stuck with an escrow acct. I can’t cancel my escrow until the amount they paid, is paid in full. My monthly payment now goes up $600.00 a month and I have been told by them I can’t do anything about it. I was also told that if I don’t pay the new monthly amount which includes the short escrow payment as well as the regular escrow they would notify the credit bureau. To all that bank with these institutions “RUN”. If anyone hears more on the short refi let us know. I as well can’t find a lender, 6 and counting.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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