FHA Short Refinance

by Chris
(Charlotte, NC)

Ask Kate about FHA Short Refinance: I am a responsible home owner who would like to take advantage of today's historically low mortgage interest rates. I qualify to refinance under HARP.

Chris continues... I contacted my mortgage servicer in March 2010 and was told they would not refinance my mortgage under HARP because my mortgage did not originate with that mortgage lender.

In October 2010, my mortgage servicer sold my mortgage to another servicer. I contacted my new servicer and was told they are not a bank and do not refinance mortgages.

I was put in touch with one of their partner mortgage lenders. That mortgage lender said because I am paying PMI I am not eligible for the HARP program.

I have a second mortgage and contacted that bank. The second mortgage bank indicated that because they are not already servicing my first mortgage they cannot refinance my first mortgage under HARP.

I am a frustrated responsible home owner with a credit score over 700 but cannot find a mortgage lender that will refinance my first mortgage under the HARP program.

I contacted a counselor through the federal housing's "hotline" and was told I definitely qualify for HARP and there is absolutely no reason why I should not be allowed to refinance under HARP. Yet I cannot find a mortgage lender that will touch my first mortgage.

I do not know where else to turn. Any suggestions?

Kate Answers: FHA Short Refinance

Dear Chris,

You have done an outstanding job following the steps given by our government, the ones I outline at Making Home Affordable Help.

Sadly you are not reaping the benefit, as is the story for thousands of homeowners.

FHA Short Refinance And Credit

I have been helping one of my family members with parameters similar to yours. They also have been sent to a mortgage lender partnering with their loan servicer. They are suggesting an FHA short refinance, similar to a short sale designed for sellers.

My question last week to their representative concerned credit. Specifically, will the FHA short refinance have a detrimental affect on our relatives' credit scores?

The answer I received was somewhat wishy-washy. He claims this is an FHA short refinance not offered through HARP. Therefore he says the program does not automatically have a negative affect on credit.

But he added, in the end the home loan servicer determines whether or not they will ding the credit of those who participate in the program designed for responsible homeowners. (Punitive is the word that comes to mind as I am writing this.)

However, if in fact an FHA short refinance is granted without affecting credit and the amount of the mortgage underwater is truly forgiven, perhaps this is a program that could help you.

Chris, if you decide to look into this, I'd like to hear back from you. Let me know if the FHA short refinance works out. Comment here on FHA Short Refinance.

Or Ask Kate another question here.

Best wishes,

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