Mortgage Lenders Nationwide

Lender News, VA, FHA, Jumbo & Conforming Mortgage Rates, Lending Tips & Intelligent Financing Dialog between Home Loan Professionals & Consumers

November 16, 2012

Negative Home Equity Refinancing for Upside Down Loans

Category: Mortgage Relief News,Published Articles – admin – 10:17 am

Comparing HARP and FHA for Refinancing a Mortgage Underwater

By now most people have heard about the “super refi” also known as the Home Affordable Refinance Program. This refinance mortgage was inspired by Fannie Mae and Freddie Mac in an effort to stem the loan defaults that were rapidly increasing from borrowers that had a tremendous amount of negative home equity and were unable to refinance into the lower market rates advertised on television and the radio. If you have a loan owned by Fannie or Freddie, you may be eligible to refinance your “upside-down mortgage.”

According to Marsha O’Hare, a financial service specialist and HUD-certified housing counselor at Apprisen, a Columbus, Ohio, the first step is to figure out who owns your mortgage. She stresses the importance of uncovering what type of mortgage you actually have. If the loan is owned or guaranteed by Freddie Mac or Fannie Mae, you may be eligible for the government’s HARP 2.0. “It allows someone who is not delinquent in their payments to refinance, even if the house is worth less than the mortgage balance.” Having the ability to refinance “1st mortgages” and “home equity loans” together could come in the HARP 3.0 Program in 2013.

Nationwide posted an article for distressed homeowners that need advice on refinancing underwater mortgages. They underscored the opportunity that the HARP 3.0 would afford borrowers that did not have liens owned by Fannie Mae or Freddie Mac. Finding a lender that can process a negative equity loan in less than a month could be challenging.

The second option to refinance an upside down mortgage is the latest relief option insured by the Federal Housing Administration. This is called the FHA Short Refinance, because it reduces the principal amount down to “fair-market value” for a specific pool of FHA customers that have a significant amount of negative equity. This FHA program is offered to borrowers who are current on their loan payments, but owe more than their house is worth. This targeted group must also have a mortgage that is not owned or serviced by Fannie Mae, Freddie Mac or FHA. A key part of the program is that refinance lenders must agree to reduce the principal of the loan, so contact your mortgage provider to see if you are eligible. Read more about short refinancing online at the FHA or Making Homes Affordable website.


No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.

Switch to our mobile site