LIFE LINE

 Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain 'underwater' non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.  The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth - or 'underwater'.  To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500. The property must be a primary residence. And the borrower's existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115 percent.  T the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. "We're throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined," said FHA Commissioner Stevens. More at www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-23ml.pdf