FHA Refinance of Borrowers in Negative Equity Positions

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ^ | August 6, 2010 | David H. Stevens

[OpusatFR]

TO: ALL APPROVED MORTGAGEES

SUBJECT: FHA Refinance of Borrowers in Negative Equity Positions

On March 26, 2010, the Department of Housing and Urban Development (HUD) and the Department of the Treasury (Treasury) announced enhancements to the existing Making Home Affordable Program (MHA) and Federal Housing Administration (FHA) refinance program that will give a greater number of responsible borrowers an opportunity to remain in their homes.

These enhancements are designed to maintain homeownership by providing borrowers, who owe more on their mortgage than the value of their home, opportunities to refinance into an affordable FHA loan.

This opportunity allows borrowers who are current on their mortgage to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent.

This Mortgagee Letter provides additional guidance for lenders regarding the requirements and administration of these enhancements to FHA’s refinance program. These enhancements are effective for loans with case numbers issued on or after September 7, 2010, which are closed on or before December 31, 2012. As noted below, these enhancements include loss coverage to be provided from funds under the Emergency Economic Stabilization Act of 2008, as amended (EESA). If the availability of such coverage is delayed beyond September 7, 2010, implementation of these enhancements will also be delayed. Eligibility Participation is voluntary and requires the consent of lien holders. In order for a loan to be eligible, the following conditions must be met: 1. The homeowner must be in a negative equity position; 2. The homeowner must be current on the existing mortgage to be refinanced; 3. The homeowner must occupy the subject property (1-4 units) as their primary residence; More at http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-23ml.pdf

[OpusatFR]

So, what I want to know is this the AUGUST SURPRISE that has been bandied about on the web?

Is this the Zombie Administrations effort to resurrect itself and win the November elections?

[paul51]

i’m not eligible. can the taxpayers just give me a chevy volt instead? silver or black please.

[whitedog57]

1. $1,000 down mortgages from state housing authorities, purchased or insured by GSEs. No Social Security number or proof of citizenship required. Thanks LaRaza!
2. $800 billion of negative equity wiped clean for Fannie and Freddie. Many thankful borrowers!
3. FHA negative equity programs.

All these are designed to forgive borrowers AND re-stimulate the housing market.

Also, more money to spend in the short run.

Tab will run over $1 trillion and just added to the national debt.

[Son House]

provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent.

Just sounds like a 'short' sale, but who is going to short to the 'borrower' that is current? There's also got to be agreement on an appraisal that the property value is less. This don't make sense, but I don't think it's the surprise, yet

[snowsislander]

So, what I want to know is this the AUGUST SURPRISE that has been bandied about on the web?

Perhaps. I read through the document, and there seems to be enough "ifs", "ands", and "buts" to make it unlikely that many folks will attempt this on their own.

If one has a good accountant, he might try to make sense of this and see if it might be worth pursuing for individual cases.

[Son House]

2. $800 billion of negative equity wiped clean for Fannie and Freddie.

And someone's savings and investments are holding that 'mortgage bundled security', my, won't they be surprised when they find out that the principle of a bond isn't a safe investment. Thanks Democrats!