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Short Pay

The Short Pay as a Foreclosure Alternative

If you owe more in mortgages and liens on your property than its current market value or what it can be sold for, you may be able to arrange for a short pay to your lenders in lieu of a foreclosure. Homeowners and property owners whose property values have plunged below the total of their loans are known as being "upside down," or "underwater," because of the negative equity in their homes. Since the real estate market downfall in the last few years, many homeowners throughout the nation have found themselves in this position, due to depressed home values in their areas.

Since late 2010, the Federal Housing Administration (FHA) began offering the FHA Short Refinance program targeted for homeowners in this situation. The program offers non-FHA home borrowers the chance to qualify for a new loan through the FHA. Borrowers must be current on their existing loan and their lenders must be willing to write off a minimum of ten percent of the unpaid balance on their principal mortgage to qualify. Borrowers have to qualify for the new loan under the FHA's underwriting standards and have reasonably good credit. All lien holders to the property must agree to the short-pay refinance. The loan in question must be on the homeowner's principal residence. Other specific requirements are involved, that means that you should discuss the particulars of your situation with our foreclosure defense attorney to determine if this option is appropriate for you.

The Short Refinance Can Save Your Home

The short refinance program is another foreclosure alternative, along with the short sale and the deed in lieu of foreclosure. You may be required to pay upfront fees to secure a short refinance but, in doing so, may be able to save your home and get up to 85 percent of its current market value. This option may wipe out your negative equity and lower your payments to an affordable range. Since it is a refinance, it may not affect your credit in a negative way.

Not everyone will be eligible to do a short refinance. Getting qualified and skilled legal advice about your options and what is best for you is vital. Our legal team can research your current mortgage situation and provide the guidance you need to make the right decision about how to handle a potential foreclosure and the negative equity consequences which may come with it.

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