The Federal Housing Administration is bringing together lenders and investors at a Sept. 29 meeting to ensure that its new FHA short refinance program does not stumble like other attempts to address negative equity and strategic defaults.
Launched earlier this month, the new program is designed to help underwater borrowers with conventional loans refinance into new FHA-insured products.
But it requires investors to take a minimum 10% writedown on the existing loan, which is always a hurdle.
"Everyone realizes that principal reduction is critical – but there are natural resistance points all along the way," FHA commissioner David Stevens told National Mortgage News.
"We have done some [short refis] already," he said after speaking at a National Association of Federal Credit Unions Washington conference.
However, the commissioner hopes the Sept. 29 closed meeting will bring together all the stakeholders to work through the operational issues and make the FHA short refinance program a success.
"The Obama administration is committed to doing all they can to make sure the program is successful," Stevens said.
