Short Pay Refi,
Short Refi, Short Pay of Refinance....
It has many names, but only one
meaning...a homeowner solution for you and your
family.
FHA Short Payoff
Refinance (Short Refi) Program
Requirements
On Tuesday September 7, 2010, the FHA
started a short payoff refinance (Short
Refi) program designed to help homeowners
who are underwater on their mortgages (Short
Payoff Refinance (Short Refi). Those who owe
more on the home than the home is worth. Known as the FHA
Short Payoff Refinance (Short
Refi) option. The Short Payoff
Refinance (Short Refi) is a refinancing
plan for borrowers who do not have FHA loans and are
current on their mortgage payments. FHA Short
Payoff Refinance (Short Refi) requirements
to participate in the Short Payoff Refinance
(Short Refi) program include credit score
minimums and having a lender willing to write off at
least 10% of the original home loan.
According to the Department of Housing and Urban Development,
the Short Payoff Refinance (Short
Refi) program is 100% voluntary--lenders or lien
holders are not compelled to participate.
As previously mentioned, the borrower must owe more than the
home is worth, and FHA insured loans are NOT eligible.
Borrowers must apply for the refinancing loan under standard
FHA requirements including a credit check.
Credit requirements for the FHA Short Payoff Refinance
(Short Refi) program include a FICO score of 500 or
greater. Major negative credit data discovered during the
application process must have an explanation from the borrower
in writing.
As with other FHA loans, the applicant is required to live in
the property being refinanced as the primary residence. If the
building is a multi-family unit, the borrower must occupy one
of those units.
According to HUD rules, the Short Payoff Refinance
(Short Refi) refinanced property must have a
loan-to-value ratio of no more than 97.75%. There are also FHA
requirements on what HUD calls “Non-extinguished existing
subordinate mortgages”. These must be re-subordinated, and HUD
rules state, “…The new loan may not have a combined
loan-to-value ratio greater than 115 percent.”
Other Short Payoff Refinance (Short
Refi) guidelines from HUD include a stipulation
that ”FHA mortgagees are not permitted to make mortgage
payments on behalf of the borrowers or otherwise bring the
existing loan current to make it eligible for FHA
insurance.”
The FHA Short Payoff Refinance (Short Refi)
option is designed for people who owe at least 15% more on the
property than their home is actually worth, and while the
program requires borrowers to be current on their mortgages
before applying, those who have used loan modification programs
in the past are eligible for the FHA Short Payoff
Refinance (Short Refi) option under the following
circumstances:
If the modification was made under the Making Home Affordable
Program, the FHA Short Payoff Refinance (Short
Refi) loan may close the month following the date
the modification was permanent.
For non Home Affordable loan modifications, the borrower must
have a record of
three on-time monthly payments. The modified mortgage must be
current for the
month due.
The FHA Short Payoff Refinance (Short
Refi) is not permanent--it is currently scheduled to
run until the end of 2012. Non-FHA loans with case numbers
issued between September 7th, 2010 and closed on or before the
end of 2012 are eligible for consideration.
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