The FHA "NegEQ" Refinance Program.

Asked by Dmauer, Humboldt Park, Chicago, IL Fri Sep 10, 2010

Can this program be used if both the 1st and 2nd mortgages are underwater. In this case, just the 1st is not underwater.

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Carl Henker, , 95928
Fri Sep 10, 2010
Under the new program the new FHA loan to value may not exceed 97.5% of the appraised value. The existing first must agree to write off at least 10% of the existing balance. The new mortgage may only be used to refinance the unpaid principal balance of the first. The second must agree to subordinate to the new FHA loan with a combined loan to value less than 115%. You can go to the link below to read more details about Mortgage Letter 2010-23. With the information you supplied I don't think this will help in your situation. You are probably looking at a standard FHA refinance program. Good Luck
1 vote
Fri Sep 10, 2010
You would refinance both into one loan given that they don't exceed 125%.
There's this new program I've heard about that government is discussing where lenders would agree to forgive at least 10% for the underwater borrowers, including seconds just letting go of the debt. You should check that out too.

Elena Ollick
Amerivest Realty
Faith Home Loans
0 votes
Rudy McDowell, Mortgage Broker Or Lender, Bloomfield Hills, MI
Fri Sep 10, 2010
Hi, Dmauer

If you're currently in a FHA loan, another option would be doing a Streamline w/o an appraisal. Your lender will only need to verify your current credit score and that you're still employed and earning an income. Exactly what you make, how long you've been employed, and what you having the bank will not be required. Given today rates, and depending on your taxes, your may also only need to bring one or 2 mortgage payments to the table just to cover establishing new escrows. Check with your lender to see if this is also available to you.
0 votes
David Hanna, Agent, Chicago, IL
Fri Sep 10, 2010
You will need to refinance both the 1st and 2nd mortgages into one new FHA loan.

As long as the appraisal comes in at a point where the total loan to value (LTV) does not exceed 125% of the appraised value when the appraisal is done by the FHA appraiser, you should be fine.
You will obviously have to qualify under the general credit and income guidelines of the program, too.

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