Hi Maryann. A short refi is to a home owner, what a short sale is for a home seller. If someone owes more than the property is worth and wants to do a refinance, the lender would have to be willing to "write-down" or write off the difference and take it as a loss. For example, say someone owes $300k on their mortgage, but property is only worth $250k, in order to refinance, the current lender, the one holding the note or mortgage, would have to accept to lose $50k. The new FHA Housing and Recovery Act of 2008 that will go into effect October 1st, offers a short refi for this type of situation. However, there are conditions attached to this. You can read about it at
I hope this helps.