What Are Short Refinance Lenders

Regardless of which mortgage lender you use, our HUD approved housing counseling can help you negotiate with them. In particular, the lenders who participate in programs like the FHA’s Short Refinance plan will be familiar to us.

With a short refinance, the principal balance owed on the mortgage is reduced. The loan is then converted into a federally guaranteed loan. This program was created to help borrowers who are current on their mortgages but owe more on their mortgage than the home is worth. Lenders who participate are required to reduce the amount owed on the first mortgage to no more than 97¾% of the home’s value.

Participation in this program is voluntary, so not every mortgage lender will offer the short refinance plan.

One thing to bear in mind is that this program doesn’t apply to loans owned or backed by Fannie Mae, Freddie Mac, the FHA, VA, or USDA. That means that 70% of all mortgage loans are ineligible.

Even if your loan doesn’t qualify, or your lender is not one of the FHA Short Refinance lenders, there are options to help you save your home. Call us to talk to a HUD approved housing counselor free of charge and we’ll come up with a plan created just for you.