Connecticut Real Estate Attorney Law Blog

New FHA Short Refinance Program

HUD recently announced a new refinance program for underwater borrowers.  They would be able to obtain, with their existing lender's cooperation, a refinance into an FHA loan.  You must be current and owner-occupied and owe more than the house is worth.  The existing lender must agree to reduce the principal by at least 10% (hence the name short refinance) and the resulting LTV must be no more than 97.75%.  Obviously the loan will have mortgage insurance and you must meet the FHA underwriting guidelines.  If you have a second, the new first and the existing second (subordinated to the new loan) must be no more than 115% of the appraised value.  There is a very good FAQ here.  There is also information on the HUD website.

This program seems like a good but as with most of the foreclosure "rescue" programs limited.  It may fill a gap in the existing programs.  Unfortunately at this time Fannie and Freddie do not appear to be participating, but they also have some similar programs.  This new FHA loan does give the underwater borrower with a lender who is willing to work with the new program an opportunity to avoid eventual foreclosure or short sale. 


About the author:  Attorney Begemann is a member of the Connecticut Bar and practices real estate and business law in Connecticut.  As an experienced real estate attorney he represents individuals and lenders in residential and commercial loan closings across Connecticut, including the purchase, sale and refinance of real estate.

Attorney Paul H. Begemann, 2764 Whitney Avenue, Hamden, CT  06518

Phone 203-230-8739                                       Fax 800-483-1904



5 commentsPaul Begemann • September 14 2010 09:50AM