New buzz word around town: "Short ReFi"

Hi Ralph - Interesting post, I have not heard the term before. I am a bit curious about a few things though: What current mortgage holder would work with a short and allow another bank to come in and charge fees to do the refinance (then make all the profit from the front loaded interest on a brand new mortgage)? Wouldn't the borrower be in a better situation to just do a loan modification with their current bank and not pay (or pass along through the short to their current bank) the closing costs for the refi? And finally why would the new bank want to refi someone who is short and take on the extra risk?

Short refis sort of flew under the radar last year. We're hearing now that they are being declined more frequently. Not sure why -- or maybe it's just banks putting out disinformation to keep the avalanche of applications at bay. Kind of like when they said they won't do a short sale unless you're behind on the mortgage.

It will be interesting to see if this is something the current lenders are willing to agree to. It seems to me there still would be LTV limitations for the refi based on program so I don't see how the short lender would benefit from a refi over a short sale.

Good information Ralph & need to check it out with my lenders.

Hi Ralph... I am going to look into this, but somehow I just don't think we really need any more programs that begin with the word "short".

I have not heard of this either, so will ask around today --- thanks for bringing this to our attention!

This sounds like it could be a cure for so many ills, but IMHO I don't think it is going to fly---or if so, will have such limited applicaton it will go the way of the loan modification. After all, it's another Lender taking huge risk on an underwater homeowner----how could they possibly make this work unless the rates were astronomical, and if so---we are back to square 1.