SHORT SALES have ruined our country. SHORT REFINANCES could save our country.

Mortgage and Lending with Seacoast Mortgage Corporation, RI (20021119LB & 20031576LL), MA (MC2107) & CT MLO 10920

Short refinances should be the norm.  They keep the homeowner in their home AND they reduce losses for the lender AND they improve the economy since home ownership stimulates economic growth.

A short refinance keeps the homeowner in their home, thus reducing the supply of homes on the market .  Short sales result in the homeowner losing their home; the loss of the American dream and creates economic disaster for everyone.

A short refinance entails the current lender or lenders forgiving debt based upon the current market value of the home.  The homeowner then refinances the remaining debt into a new mortgage.  For example, a home is currently appraised at $200,000.  The homeowner owes $275,000.  95% of the current value is $190,000.  The difference between $190,000 and $275,000 is $85,000.  The current lender(s) forgive the $85,000, enabling the homeowner to refinance the remaining $190,000 into a new mortgage.

As you can see, a short sale does the SAME action as a short refinance: a forgiveness of debt, BUT with a short sale, a stranger buys the home and the homeowner loses their home AND the supply of homes increases.  Lenders suffer larger losses, as well, with a short sale since they are typically sold for less than 95% of current value.  A short refinance keeps the homeowner in their home.

Now, we could take this one step further and SAVE the lenders their losses by doing the following along with a short refinance.  We could place a silent 2nd mortgage on the home after the refinance to allow the former lender(s) to salvage their loss upon any sale of the property in the future.  In this way, it is a win-win-win for both the homeowner, the lender and the economy.

So, I as I have been asking myself for years now, who came up with the SHORT SALE transaction idea and ignored the OBVIOUS benefits of the SHORT REFINANCE transaction?  Homeowners have been told to be late on their mortgages to obtain loan modifications, which have failed miserably.  The homeowner then becomes so far behind, even if they hear of a short refinance, it then is too late.  Short refinances are not discussed in the media and the lenders do not speak about short refinances.  WHY?  Short refinances are available and the BEST option for everyone's sake.

Is it too late for short refinances to now be the norm?  NO!  It is never too late, but no one is listening.  I have gone to our senator and approached other politicians.  They all love the idea, but no one has made it their platform.

I will keep promoting this until someone does listen AND enacts this better solution to KEEP HOMEOWNERS IN THEIR HOMES AND START TO BRING THIS ECONOMY BACK!

Posted by

Ann Sabbagh, President

"The BEST compliment is a client referral: Thank YOUUU!"

Seacoast Mortgage Corporation

401-305-6906 or 508-243-1190

Residential & Commercial Financing


RIAR: teacher for "The Mortgage Course"; "Valuation of Commercial/Investment Real Estate"; "Reading Financial Statements"


"When you choose me as your mortgage consultant, you also choose a financial planner who cares about YOUR financial strength."


Re-Blogged 2 times:

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Rosemary Brooks
BMC Real Estate - 209-910-3706 - Stockton, CA
The Mother & Daughter Realty Team

Strong words to blame on short sales.  Don't you think it is more like bad loans ruins our country?  I'm just saying.

Aug 07, 2011 07:45 AM #1
Ann Sabbagh
Seacoast Mortgage Corporation, RI (20021119LB & 20031576LL), MA (MC2107) & CT - Pawtucket, RI
President, Sr. Loan Officer

Hi Rosemary, yes loan products that were sold should never have been allowed to be sold.  This blog is not about what really is to blame.  The blog is meant to compare SHORT SALES to SHORT REFINANCES.  This country chose the wrong option.  Short Refinances would have kept us from this economic disaster.  It would have been bad, but NOT to this extreme.  Homeowners would have remained in their homes and there would not be so many homes on the market.  It would have stabilized the real estate market.  Thank you for your comment.

Aug 07, 2011 07:59 AM #2
Michael A. Caruso
Surterre Properties - Laguna Niguel, CA

I love the concept of refinancing shorts rather than dumping them on the market. Can we promote this legislatively?

Aug 07, 2011 08:02 AM #3
Ann Sabbagh
Seacoast Mortgage Corporation, RI (20021119LB & 20031576LL), MA (MC2107) & CT - Pawtucket, RI
President, Sr. Loan Officer

Michael, I have tried and failed.  The politicians I have spoken to love the idea, but no one promotes it on their agenda.  If you have any ideas or contacts, please feel free to forward the blog.  I will assist in any way I can.  I care about this country and your comment shows you do as well.  Thank you for your comment and anything you can do to promote Short Refinances.

Aug 07, 2011 08:38 AM #4
Christina Hayes
Everlasting Credit Repair - Morristown, TN
Credit Repair Expert

Ann, I agree anything to keep the homeowner in their home vs the property becoming an eyesore. For not all REO's sell, being originally from Miami I am always dismayed at the number of blocks, not just homes, NOPE whole blocks of empty homes. Plus, the homeowner who lost the property are paying rent somewhere, right? So who wins in a foreclosure? No one. And in regards to the bad loan, I originated loans during the boom, when lenders were so hungry for business? And no one is truly to blame, because you had clients who wanted to be homeowners and fell in love with a home, me who originated their loans, on rates and terms they could afford, and then my wholesale lenders, like a bottomless pit, saying gimme gimme gimme more.. Underwriters couldn't process loans quickly enough, without their investors saying c'mon, c'mon close more... So in the end greed and taking advantage of fulfilling fantasies is what got us all in the mess we are in..

Aug 07, 2011 08:48 AM #5
Jason Potrzeba
Webster Bank - Providence, RI
Mortgage Banking Officer

The Sabbagh Home Short Refi Act.

Or would it be a Bill? I always get those confused...


Aug 18, 2011 11:17 AM #6
Debbie Holmes
Gold Key Real Estate - Boise, ID
Gets the job done!

I approve of the idea....I thought we called them loan modifications!

Nov 20, 2011 08:44 AM #7
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Ann Sabbagh

President, Sr. Loan Officer
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