Principal Write Downs and Debt Forgiveness Changes

The Department of Housing and Urban Development (HUD) and the Department of the Treasury (DOT) announced improvements to the existing Making Home Affordable Program (MHA) and Federal Housing Administration (FHA) refinance program that will give a greater number of responsible borrowers an opportunity to remain in their homes. These improvements are developed to sustain homeownership by providing borrowers, who owe more on their mortgage than the value of their home, a chance to refinance into an affordable FHA loan. This opportunity gives borrowers who are current on their mortgage to qualify for an FHA refinance loan given that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10%.

FHA NEP Highlights

• Home Owner Must be in a Negative Equity Position
• Home Owner must be on the Existing Mortgage to be Refunded
• Home Owner Must Occupy the Subject Property (1-4 units) as their Primary Residence
• Existing Loan to be Refinanced Must Not be an FHA-Insured Loan
• Existing First Lien Holder Must Write Off at Least 10% of the Unpaid Principal Balance
• The Refinanced FHA-Insured First Mortgage Must Have a LTV (loan-to-value) Ratio of no More Than 97.75%
• The existing loan to be refinanced may not have been brought current by the existing first lien holder, except through an acceptable permanent loan modification such as a Home Affordable Modification Program (HAMP) modification or a traditional modification. Exceptions apply.
• 30-Year Fixed Rate loans Only
• Maximum LTV 97.75% / CLTV 115%

Contact Valley West Mortgage (702) 696 - 9900, for more information.