Short Refinance is the replacement of a mortgage, usually with a smaller mortgage, when the borrower is already in default. This is done to transition the borrower to a more affordable payment structure. The lender has to write off the difference between the old mortgage and the new mortgage, but this may be preferable to foreclosure.
"Helping People"
If you are a homeowner who can't refinance for ANY reason, we are here to help. It doesn't matter if you are current on your mortgage, or haven't made a payment in 2 years. It doesn't matter if you have great credit, or troubled credit. It doesn't matter if you owe $200,000 more than your home is worth, or have $200,000 in equity. It doesn't even matter if your house is scheduled to be auctioned off to the highest bidder.
If you are in financial turmoil due to extenuating circumstances, even facing foreclosure, we are here to help! Our group of consultants will work with your lender hand in hand to negotiate a favorable outcome for all parties involved. Whether you want to KEEP your home, or sell your home for less than what you owe, you have plenty of options that we would be more than happy to discuss with you. Unfortunately, TIME IS NOT ON YOUR SIDE. Feel free to read through our website, or contact us immediately to learn about your options.
Who can a Short Refinance help?
A Short Refinance helps homeowners that do not have sufficient equity to refinance through normal channels. This type of refinance is most commonly used for borrowers experiencing a financial hardship. The most common financial hardships are:
- Reduced income.
- An adjustable rate mortgage that has an increase in payment beyond the borrower's ability to pay.
- Circumstances beyond the borrower's control such a family illness or personal injury.
Why would a lender accept a Short Refinance?
Properties that end up in foreclosure typically have no bidders at the foreclosure sale when the property is upside down in value. Therefore, the lender ends up owning the property, which is referred to as an REO (Real Estate Owned). It ends up costing them tens of thousands of dollars to maintain these properties, along with the thousands they have already lost, due to the foreclosure itself. If a property goes all the way through foreclosure, the money lost in back payments, interest, late payment fees and attorney costs alone can be in the thousands. Then, if the property doesn’t sell at the foreclosure sale, they have additional costs of more attorney fees, clean up crew costs, maintenance and repair costs, insurance premium costs, taxes and realtor fees. Even on a property worth only $100,000.00, the cost to the lender to go through a full foreclosure can be well over $50,000.00. The costs involved of going through a foreclosure alone, gives most lenders the incentive to accept an offer to settle. Every situation will be unique and will be dealt with on a case by case basis.
FHA Short Refinance:
Who can QUALIFY?
Allowable
Mortgage Delinquency and Foreclosure AFTER payment increase
No Reserves or Savings
Single and Multi-Family Homes
Extremely Low FICO Scores
Co-Borrowers that do not live in your residence
Not-Allowable
NOT A NEGATIVE AMORTIZATION (OPTION ARM) LOAN
Bankruptcy within 2 years
Investment Property
Mortgage Lates within 6 months of mortgage payment increase
Program Requirements
Monthly payments MUST HAVE ALREADY INCREASED
THE PROPERTY MUST BE A PRIMARY RESIDENCE
Your current mortgage must be an ARM (adjustable rate mortgage) that has already increased in payment.
You must have been out of bankruptcy for 2 years with re-established credit with the exception of the ARM mortgage if it has increased in payment.
Your income must be documented and pass a debt to income ratio of 50%. (This can be explained to you in detail during an appointment)
For example, if we negotiate your mortgage down to $300,000, the DOCUMENTED GROSS income between ALL BORROWERS and rental income should be at least $7,000 per month to have a reasonable chance for approval. |
