If your home loan is owned by Fannie Mae or Freddie Mac and you're underwater, you have programs available to help you refinance. If your loan isn't owned by Fannie Mae or Freddie Mac and you're underwater, you've been pretty much out of luck. But maybe not for long.
In September, the FHA announced a program for homeowners who are underwater on their mortgages called the FHA short refinance option. it’s a refinancing plan for borrowers who do not have FHA loans and are current on their mortgage payments. The borrower must apply for the loan under standard FHA requirements including a credit check. A minimum 500 credit score is required and the property must have a loan-to-value ratio of no more than 97.75%. Unfortunately, the program is 100% voluntary and lenders must be willing to write off at least 10% of the original home loan. The program hasn't rolled out yet, but when it does, let's hope lenders are willing to participate. Wishful thinking, I know...
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