In 2010, FHA implemented a plan to support struggling borrowers that were in a negative equity position. If you purchased your home with 2 FHA loans and are currently “underwater,” (you owe more than what the home is worth) then you may qualify to reduce or eliminate the second mortgage with an agreement and approval from your second’s lienholder. This program is designed for any homeowner that is in a negative equity position to refinance their combined loans to a single first lien mortgage.
To qualify for this program:
- The property must be owner-occupied.
- You must be current on your mortgage payment
- The mortgage must be a first lien originating prior to or on January 1, 2009.
- Your second mortgage lienholder must agree to participate in the FHA2LP
- The loan was previously evaluated for HAMP and non-HAMP modification
- The loan must be a FHA or VA loan
- Your combined first and second lien must not be greater than 115% of the home’s current market value (For example, You owe $300,000 on your home, however, the current market value is $200,000, then your combined loan balance can be reduced to a maximum of $230,000.
No felony, larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction within the last 10 years.
Please be informed that prior to any foreclosure proceedings, your lender/servicer must comply with an Independent Foreclosure Review as mandated by the Office of the Comptroller of the Currency, The Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision. Read more.Did you Get an Independent Foreclosure Review.