March 15, 2011 by 28 Comments


Few topics have prompted as much discussion on this blog as the frustration of homeowners over the FHA Short Refi program.  The program was intended to help those who are underwater on their homes refinance at current market rates into FHA insured mortgages. At the time the prevailing mortgage rates were at or near all-time lows (rates have since deteriorated, although many people would likely still save money through the FHA short refi).  The problem was that the program really failed to properly align servicer/investor/lender/homeowner interests, and the program never really took off due to lack of lender participation.  The program started on September 7, 2010, and as of Dec 31, 2010, the program resulted in 15 refinances total (see page 8 of this PDF).

Now, as part of our current Congress’ lip service toward budget cutting, many wish to cut the FHA Short Refi Program (as well as HAMP and the Neighborhood Stablization Program).  In a 256-171 vote, The House chose to defund the program (the vote fell largely along party lines and the bill is unexpected to pass through the Senate; the president has promised to veto the bill if it should reach his desk).  House Financial Services Committee Chairman Spencer Bachus made this lame argument to end the program (cue Helen Lovejoy):

“The money from this program doesn’t go to the homeonwer, it goes to the lender, it goes to the banks.  And who pays for it?  The taxpayers and ultimately our children and grandchildren because the federal government borrows 42 cents of every dollar it spends.”

So of course it is fitting that five of the largest U.S. banks have jumped on board the program, according to a Housingwire article by Jon Prior.  Per the article, Bank of America, Citigroup, JP Morgan Chase, Ally Financial, and Wells Fargo are now participating with the program.  The article did not stipulate to what degree these lenders are participating.

It seems unlikely (although not impossible) that Republicans will be able to end this program.  I hope that some of you who have tried to work a modification through the short refi program are able to do so.  If you make any headway, I’d love to know.  Post your experience in the comments section below.

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  •' Dennis Hultz says:

    if anyone has info for Chase, on them accepting applications, please let me know…thanks

  •' Jennifer says:

    I would also be interested if Chase is accepting applications for a short refi. Thanks!

  •' Mike says:

    Well, we just found out about this program. Are starting the process with Citi. Will let you know if it is successful or not…

  •' KG says:

    Despite indications that is will participate in the program, when I contact Wells Fargo they indicate that they have not decided if they will participate in the program. It is frustrating because, first they said they did not know about the program, but when I sent copies of the articles that reflected that they agreed to participate, they indicated that they are trying to determine if they will do so.

  •' KG says:

    Despite indications in the media that it would participate in the FHA Short Refi program, when I contacted Wells Fargo they indicated that they have not decided if they will participate in the program. It is frustrating because first they said they did not know about the program, but after I sent copies of articles that reflected that they agreed to participate, they indicated that they were in the process of deciding if they will do so. However, all indications are they are NOT offering this modification option at this time.

  •' Rusty says:

    I am curently involved with FHA Short Refi’s and they are getting funded – Call me for more info – Rusty – Stearns Lending, Inc. 909 895-06905

  •' Rusty says:

    I am curently involved with FHA Short Refi’s and they are getting funded – Call me for more info – Rusty – Stearns Lending, Inc. 909 895-6905

  •' Rusty says:

    It is important to work with a short pay specialist to get the paperwork submitted properly and follow thru. The other challenge is to have a lender ready to fund the “New” FHA loan – I have put considerable time and effort into this knowledge. I have been in the mortgage business for 23 years and this is the first time a client has been able to refi and “Lower” the principal balance. What a WIN – WIN.
    If you need help or have questions give me a call:
    Rusty Stearns Lending, Inc. 909 895-6905

  •' Ritesh says:


    Could you please share some more details? I have my loan with Citi and more than 100K underwater.

  •' JL says:

    I had the same problem with Wells. After being transferred around nine times, I was told that they are not participating. I went as far to quote the spokesperson, Tom Goyda, and they still said they weren’t participating.

  •' Mike Spangler says:

    When I contacted Citi, they said they are not participating in the program. I have heard that it helps to work this through a lawyer. I will only post again if I find something that does work!

  •' Lisa says:

    Contacted GMAC’s Loss Mitigation Dept. (877 928 4622) & stated they do not participate in the FHA Short Refinance Program.

  •' Jill says:

    Is it true then that it is only available to people that FHLMC or FNMA loans, I have a portfolio loan from back to World Savings. Wells says just Freddie or Fannie……..

  •' elvie nisa says:

    Rusty are you still involved with FHA short refi – can I contact you.

  •' Rusty Massro says:

    The FHA Short Refi Program is slowly gaining momentum with a few specific Lenders and Servicers able to process the Short Payoff’s. The problem with the program is that it has “No Teeth”. “Participation is voluntary and requires the consent of lien holders”is the opt out for the Banks, Lenders, and Servicers participation in the program. It’s too bad that the tax payer funding to help “Responsible Homeowners” thru this program is not being utilized. Yet another great proposed program , but poor implementation.
    I can be reached at [email protected]

  •' Rusty Massro says:

    I have worked on the Short Refi Program for over 1 year – It is phony – Jon Prior does not know what he is talking about. With a simple phone call to any of the 5 Major Lenders you will find that they do not participate in the FHA Short Refi Program, and in most cases they don’t even know what we are talking about. In my experience, I had 30 clients fully approved for the FHA Short Refi, only to find that the lenders do not cooperate with Principal Reductions. I doubt that there is any monetary incentive to the participants as Jon Prior has indicated, otherwise this program may have gotten traction. I was able to fund 1 FHA Short Refi and saved my client over 200K in principal and settled another 50k 2nd for 5k – Big Deal! The government programs are nothing but window dressing from the Obama Administration. The banks are still doing what they want.
    So now my clients are going to move into the next phase – my “responsible” underwater homeowners are now going to short sale their properties and move on using the FHA Short Sale guidelines. Now the banks get to lose even more money than they would have with the FHA Short Refi Program.This is the Bail & Buy program for homeowners.

  •' Mike France says:

    Hi Rusty,
    I’m one of those responsible underwater homeowner,I’m just starting the process. My Lender is B of A Do you help clients go through the process i’m 100k underwater with a 6.5 interest only loan first only.

    please let ms know your thoughts I’m in orange county Ca


  •' Terry Ritchie says:

    Nationstar Mortgage out of Texas is also one of the mortgage companies identified as participants but not really. Guess they just wanted their name in the paper.

  •' Kathy says:

    We have a $500k mortgage with Wells Fargo and bought in early 2006. We put 20% down on an interest only payment 10-year arm at 6.5% and initially paid down additional principal whenever we could. So our primary mortgage balance is at about 100%-103% of the market value. We are current on our mortgage. We are not Fannie or Freddie backed. We would like to just refi the current balance but have assumed we can’t do this under a normal refinancing process because it would be a 100% refinance and we don’t have another 20% to put down on the house. Is this true? We desperately need to take advantage of the current low interest rates. We tried hiring a lawyer for Hamp refi but Wells Fargo said they didn’t have time to deal with us because we are current on our loan i.e. not in foreclosure. We qualify for an FHA Short Refinance under the eligibility requirements. After reading your blog, I am discouraged. Do you think we could be successful if we requested a refi with no principal reduction? What is our best strategy? Who do we call at Wells Fargo and what do we say?

  •' Pamela says:

    I am looking for a lender that is participating in the Short Refinance program….anyone?? ~~chirp chirp~~ crickets

  •' Luis says:

    I am also looking to FHA Short Refinance with Chase, I have 2 mortgages both with Chase, one for 275,000 and a credit line of 68,000. Overall my my mortgage is 345,000 and the property is valued at 300,000. It is Freddie Mac backed and I am going to call Chase to see if they participate.

  •' autum says:

    I was hoping but I’m not finding much here. This program sounds like the donotcall registry. You register your numbers but then telemarketers can subscribe if they want those numbers.

  •' Lo says:

    I been trying to get Wells Fargo to do a FHA short refi on our mortgage to reduce the interest. We have been in the HAMP Program for 2 years and we are current on our mortgage payments but WF stated could not help us because we are already in a modification program. I only asked to refi our interest rate because it so high 7.25%(*!*!) and HAMP did not address lowering your interest rate in the program. I was told WF is only paying attention to people who are behind in their mortgage payments. It is their option to help the people who are current.

  •' Valerie says:

    Luis, you can only participate in HARP under MHA Program, Chase is a participant.

  •' Patrice says:

    any updates on FHA Short Refi with BOA

  •' kristi says:

    I just attempted this with Citi. They are on the “current” list of participants but when I called and spoke with 5 different people they did not know what the program was. One individual seemed to acknowledge it but then he started stating details that have nothing to do with the program.

  •' Vanessa says:

    It is September 2014 does anyone still have a recent experience with FHA Short Refinancing. Wells Fargo is not participating but what Banks are currently participating.

  •' Heath says:

    Am also trying to do this now. Have not found anyone willing to do it yet, but a few that have heard of it at least. Of course those folks are not at my current lender. Please share if you have any success.

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