The Obama administration yesterday announced additional efforts to stem foreclosures by offering lenders and homeowners incentives to cut payments on second mortgages, write down balances on first mortgages that are underwater, and repay loans in a timely fashion. The U.S. Treasury Dept. also wants lenders and their customer-service agents to agree to modify both first and second mortgages as part of a comprehensive solution.

Details of the foreclosure prevention plan include: Decreasing second-mortgage interest rates to as low as 1 percent for five years for some borrowers; and reviving a Federal Housing Administration effort to persuade lenders to reduce loan balances enough so that borrowers again have equity in their homes.

Funding from the program will come from a previously authorized $50-billion allocation from the $700-billion Treasury Dept. rescue fund established by Congress last year. The plan would provide cash incentives to both loan officers and borrowers for successful second-mortgage modifications. A loan officer would receive $500 upfront, plus $250 annually for up to three years as long as the loan remains current. Borrowers who make payments on time will receive $250 a year for up to five years.

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Many homeowners wonder how they can lower their mortgage that reflects current market conditions.  A Short Refinance is the solution.  A Short Refinance is simply as follows, straight from the guidelines:

The Short Pay Refinance is similar to a Short Sale with one major exception; the homeowner keeps their home! It is the same processes, along with the techniques used while negotiating a Short Sale or Loan Modification. Your broker will negotiate a settlement for a reduction of the principal loan balance on the current note. Once an acceptable settlement is reached a new loan is completed for the homeowner (thus the refinance portion of Short Pay Refinance.)

Both parties benefit from a Short Refinance; the homeowner reduced the principal amount owed (generally 95-97% of the current market value) as well as lower payments; the current lien holder actually nets an average of 10% more than they would with a Foreclosure or Short Sale so it is in their best interest to work out a settlement.

If you need help with your loan, we will gladly help you out. Call us at 1-866-495-3566 to get more information. Our friendly and experienced staff are waiting.

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