Part of The $300 billion Housing and Economic Recovery Act of 2008 is a program designed to help consumers refinance their home loans into cheaper, government insured loan programs.  To qualify for the program, borrowers need to show a hardship(31% or more of their gross monthly income going towards mortgage payments) and that without assistance, they will soon go into default on their existing mortgages.  The program is only for owner-occupied loans and the loans need to have been originated between 1/1/2005 and June 2007.

The new "Short Refi" loans will be insured by FHA, and apparently banks will be given a benefit for forgiving a portion of the loan being paid off, although details were unclear.  There is no word on what programs will be available for responsible borrowers who took out loans they could afford and have kept current.

The real question is, will banks and servicers cooperate and get this program off the ground?

Michael Byrne

www.refi-fhasecure.com