FHA Short Refinance

by Chris from 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. 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.



Chris continues... 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.
FHA Short Refinance
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

Ask Kate at Get-Your-Best-Mortgage-Rate.com
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.

Best wishes,

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Questions about this program
by: Martin M

I am also experiencing the same problem as by Chris from Charlotte, NC. I spoke to some lenders and nobody know about this program. Do you know who does?

Hi Martin, Kate here...

Making Home Affordable continues to present FHA Short Refinance as a viable option for eligible underwater homeowners.

Yet participation by lenders is voluntary. Of course, for non-Fannie Mae and non-Freddie Mac mortgages, participation in HAMP is also voluntary. Yet, many lenders choose to participate.

By the lack of participation in FHA Short Refinance, I believe we can safely conclude that lenders are not enamored, for whatever reasons, with the loan program.

It's too bad. I'm sure the program cost big bucks to develop and I think held promise for many underwater borrowers.

Best wishes, Kate

P.S. You can read more about HAMP loan modification at HAMP Tier 2 Modification for Affordable Payments and HARP 2 Refinance for Lower Mortgage Rates.

FHA Short Refinance
by: Gina in Miami, FL

Hi Kate, I would like to apply for a FHA Short Refinance program with my mortgage company, Wells Fargo, which is both the lender and servicer for my loan. I meet all of the criteria for this program listed on the MHA.gov website. (Wells Fargo is also listed as an approved FHA lender.)

I spoke with representatives in both the Refinance and Home Preservation Departments within Wells Fargo, but neither claimed they knew about the program nor knew who I should speak to.

I have also tried to find out which department within Wells Fargo I need to contact by asking my local HUD office, the FHA Servicing Center and the nonprofit home counselors affiliated with the HOPE hotline, but no one seems to know.

Who should I contact within Wells Fargo about submitting an application for the FHA Short Refinance Program? Or where can I look to confirm whether or not Wells Fargo is participating in this program?

Do I need to first speak with a separate FHA approved mortgage company that will hopefully purchase my loan through this program?

Thanks so much for your help.

Hi Gina, Kate here...

Well, this may come under the category if it walks like a duck and quacks like a duck...

What I mean is, if it sounds like no one at Wells Fargo knows of the FHA short refinance, it may be an indicator that you are spinning your wheels on a program that, for all practical purposes, is not available.

But if you want to pursue the underwater refinance program a bit more, try the Homeowner's HOPE hotline at 1-888-995-HOPE (4673) once again. Making Home Affordable says these HUD-approved housing experts can help you understand your options and work with your mortgage company.

That being said, if they too can't point you in the right direction, you may be pursuing a program that, no matter how much it interests you, does not interest Wells Fargo or Making Home Affordable at this time.

Best wishes, Kate

P.S. Go to FHA Short Refinance for Borrowers with Negative Equity for more information.

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