What’s that you say? You’ve never heard of a short refi? 

Don’t feel left out, most people have not heard of this process or program. 

So let me start with telling you what it is. A Short Refinance is similar to a loan modification in the fact that you are renegotiating the terms of your loan with the investor who owns your note.

Any many of you know, loan modifications typically reduced your interest rate to a level where your payment becomes affordable. 

However, loan mods do not address the bigger issue and that is the amount owed on your home or the mortgage balance. 

This is the real issue as so many people are underwater with their homes. Meaning they own more on their mortgage than what their home is worth in the market today.

The problem with a loan modification is it does not address this problem which is the real issue dragging the housing market down.

That is where the short refinance comes in! With a short refi, you get a new refinance loan with a new bank. Then you negotiate a short sale on your home. Meaning you negotiate a payoff with your current lender for the current market value which is less than what you own. The new mortgage or refinance pays off the original lender and you have a new loan on your home at the current market value! 

Nice, don’t you think? Well, in theory it sounds great. However, in practice it has been very difficult to do. 

But, this might be changing. There is a bill in congress right now that will offer banks an incentive to accept these sort of deals. My guess is another 6 months from now this might be the big opportunity we all need to really fix the housing market and your personal mortgage issues. 

Keep checking back as I am following this issue real close and will let everyone know when its something they have a chance at! 

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