FHA program falls short on "short refis"

FHA program falls short on "short refis"

We have written in the past about the Federal government's attempts to help homeowners who find that their home is worth less than the amount of mortgage liens.

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Per The New York Times, there is "scant interest" in one of these programs- the F.H.A. Short Refi Program.

The Federal Housing Administration’s Refinance of Borrowers in Negative Equity Positions program, more commonly known as the F.H.A. Short Refi, enables borrowers who owe more than their homes are worth to refinance into an F.H.A. loan with a lower monthly payment.

Unfortunately, the Times reports that only a

only about 4,600 F.H.A. loans have been originated under the program, a far cry from the 500,000 to 1.5 million borrowers the Department of Housing and Urban Development estimated could be helped when it announced the program in 2010.

Why did this program fail?  For two reasons- first, the program is optional, and, second, the nations largest sources of mortgage money, Fannie Mae and Freddie Mac, refuse to participate in the program.

You see, in order for this program to work, the lender must waive thousands of dollars in loan principal.  And who wants to do that.  Some have suggested that TARP money be used to buy down the loan balances but that will require regulatory changes for that to happen.

In the meantime, homeowners are still behind the 8 ball.

To read more, see the full column here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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