In pursue of lowering the mortgage and monthly payments through the Short Payoff Refinance

Just a few months ago homeowners who needed to refinance their mortgage due to various reasons found themselves not being able to refinance because they owed more then what the property was worth.  Some continued their mortgage payments until they couldn't anymore and let the property foreclose.  Others decided on the Short Sale of their property and had the bank forgive them for the difference of what they owed and what the property sold for.  Although the Short Sale was a better alternative then having the property foreclose, they still had to dump their real estate asset and go rent somewhere for the next three years. 

The Housing and Economic Recovery Act of 2008 (HR3221) made it possible for distressed homeowners to refinance through the FHA Secured program under the HOPE for Homeowners (H4H) up to 90% Loan-to-Value (LTV) into an affordable 30 year FHA fixed.  In my opinion, this program is superior because it allows the homeowner to save their biggest asset by refinancing their delinquent mortgage into a more affordable loan amount and payments.  However, the Up Front Mortgage Insurance (UFMIP) of 3% and monthly Mortgage Insurance (MI) of 1.5% are to expensive and not all homeowners should have to penalized when they have not been late whatsoever on their mortgage.

The Federal Housing Administration (FHA) has been very aggressive in trying to stabilize the housing slump with various loan programs designed to increase sustainable home ownership.  The Short Payoff Refinance is one of the many programs designed by FHA to help homeowners who have never been late on their mortgage payments or consumer debt to refinance their mortgage up to a maximum of 97% LTV under an FHA insured mortgage.

Homeowners with excessive obligations now have the opportunity to avoid financial hardship by refinancing under this program before it is to late.  This Short Payoff Refinance will give the homeowner lower monthly payments and an affordable mortgage loan.  Through this refinance it now gives the homeowner the opportunity to start savings in an asset accumulation account so there won't be a next time of possible financial hardship.

The Short Payoff Refinance is similar to Short Sale with respect to the documentation required with the exception of a purchase contract.  The homeowner is required to provide a hardship letter along with a financial profile documenting all of their income and debts.  Once the new loan has been approved, the negotiation process begins with the current lender.  This process, like the Short Sale, can take more then 60 days depending on the lender.

Although this program is voluntary, most lenders are cooperating with this program.  It makes more sense to comply with the Short Payoff Refinance then foreclosing on the property.  Lenders have to much to risk by spending expensive attorney fees to foreclose on the property and then risking to sell the property at a lower price due to declining markets.

Finally a program that helps homeowners at the very start of the problem before it is too late.  With proper Mortgage and Financial Planning the homeowner can sit with a Mortgage Planner and a Financial Planner to create a strategy that can be integrated with their overall financial plan and payment and equity objectives.