New buzz word around town: "Short ReFi"

By
Real Estate Agent with John Aaroe Group BRE #01708344

Short RefiNew buzz word around town: "Short ReFi"

I had a mortgage broker email me the other day with what appeared to be a standard solicitation.

But before I hit the delete button, I gave the title a snoop and there was a term that caught my eye.

They were stating that they do "Short ReFi's"

At first I though about it and could sort of figure out what that meant.

So I started researching it and also asked one of the mortgage brokers that I work with what that was all about.

So I'm thinking to myself, what's the difference between a Short ReFi and a Loan Modification?

The principle is the same:  refinancing the existing loan(s) with a lower principal amount and/or lower interest rate, with the permission of the mortgage holder.

Well, I guess the only difference is that a Short Refi could come from a lender OTHER than the one who holds the mortgage as opposed to the existing one doing a Loan Modification.

There also may be instances where the homeowner is in a financial position to make up the deficit in cash themselves in order to refinance the home.

Hit your mortgage broker up for details on this!

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Re-Bloggged 2 times:

Re-Blogged By Re-Blogged At
  1. Richard Ruggaber 07/24/2010 12:57 PM
  2. Rose Osman 07/24/2010 07:13 PM
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Comments 7 New Comment

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Rainmaker
177,290
Steve Baklaich
RE/MAX Results St Cloud Mn real estate

Hi Ralph - Interesting post, I have not heard the term before. I am a bit curious about a few things though: What current mortgage holder would work with a short and allow another bank to come in and charge fees to do the refinance (then make all the profit from the front loaded interest on a brand new mortgage)? Wouldn't the borrower be in a better situation to just do a loan modification with their current bank and not pay (or pass along through the short to their current bank) the closing costs for the refi? And finally why would the new bank want to refi someone who is short and take on the extra risk?

July 24, 2010 11:43 AM
Rainmaker
102,470
Brian Bean
Homeowner Advocate, Dream Big Real Estate, S.Calif
Dream Big Real Estate

Short refis sort of flew under the radar last year. We're hearing now that they are being declined more frequently. Not sure why -- or maybe it's just banks putting out disinformation to keep the avalanche of applications at bay. Kind of like when they said they won't do a short sale unless you're behind on the mortgage.

 

July 24, 2010 11:45 AM
Rainer
228,888
Stephanie Reynolds
East County San Diego Homes 619-838-4408
Integrity First Financial Group, Inc.

It will be interesting to see if this is something the current lenders are willing to agree to. It seems to me there still would be LTV limitations for the refi based on program so I don't see how the short lender would benefit from a refi over a short sale.

July 24, 2010 12:25 PM
Rainmaker
1,050,849
Ginny Gorman
Homes for Sale in North Kingstown RI and beyond
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate

Good information Ralph & need to check it out with my lenders.

July 24, 2010 01:01 PM
Ambassador
745,807
Steve Shatsky
Dallas Real Estate & Short Sale Specialist (214)213-0340
Prudential Texas Properties

Hi Ralph... I am going to look into this, but somehow I just don't think we really need any more programs that begin with the word "short".

July 26, 2010 11:40 PM
Rainmaker
1,370,206
Joan Cox
Denver Real Estate - Selling One Home at a Time
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373

I have not heard of this either, so will ask around today --- thanks for bringing this to our attention!

July 27, 2010 09:52 AM
Rainmaker
175,732
DEBORAH STONE
Hogue and Belong Bankers Hill- San Diego, CA

This sounds like it could be a cure for so many ills, but IMHO I don't think it is going to fly---or if so, will have such limited applicaton it will go the way of the loan modification. After all, it's another Lender taking huge risk on an underwater homeowner----how could they possibly make this work unless the rates were astronomical, and if so---we are back to square 1.

July 30, 2010 06:59 PM
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Ralph Gorgoglione

California Real Estate (800) 591-6121
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