Starting September 7, 2010, the Federal Housing Administration (FHA) will offer a new refinance program to qualifying underwater homeowners. To be able to participate in the program you must be current on your home loan, your credit score must be 500 or above, and the home must constitute your primary residence. Further, all lien holders related to the property must agree to the refinance and agree to write off at least ten percent (10%) of the unpaid principal balance. As most borrowers know, lenders are loathed to write off any of the principal regardless of the possible incentives. The program does, however, offer more incentives beyond new FHA-insured mortgages. The program contemplates certain incentives for any second lien holders to provide a full or partial extinguishment of the lien. HUD says interested homeowners should contact their lenders to determine if they are eligible and whether or not their lender agrees to write down a portion of the unpaid principal. Keep in mind that the present loan must be a non-FHA loan.
Tisha Black Chernine, Esq.
2 Responses
Two questions, 1) the write down can be more than 10%, correct? Down to what amount, the current market value? 2) Incentives to 2nd lien holders, how is this incentive affected when the 1st and 2nd lien holders are the same entity?
Thank you!
Greg,
Banks or investors CAN reduce the principal by more than 10% but they are REQUIRED to reduce the principal by a minimum of 10%. As far as incentives to 2nd lien holders are concerned, the information released so far does not indicate if the incentives change at all if the bank holds both the first and second mortgage.
Thank you for your questions and don’t forget to attend the Town Hall meeting on September 25th at 10 AM at the Green Valley Ranch. Tisha Black will be answering questions about the Las Vegas Real Estate market. For more information, please visit our homepage at http://www.blacklobellolaw.com. Hope to see you there!