FHA Negative Equity

Mortgage Relief: FHA Negative Equity (Available to Current PennyMac Customers Only)

PennyMac is one of the leading providers of the FHA refinance for borrowers with negative equity. This program assists borrowers who owe more on their mortgages than their homes are worth to refinance into an FHA-insured loan that more appropriately corresponds to the present value of their home. We call it the Positive Equity program. Other names for the program are FHA Short Refinance and Negative Equity program.


  • Helps you refinance into a more affordable, more stable FHA-insured mortgage
  • Reduces the amount you owe on your first mortgage to no more than 97.75 percent of your home's current value


  • You're not behind on your mortgage payments.
  • You owe more than your home is worth.
  • You must be a current PennyMac customer.
  • Your mortgage is not owned or guaranteed by Fannie Mae, Freddie Mac, FHA, VA, or USDA.
  • You occupy the house as your primary residence.
  • You are eligible for the new loan under standard FHA underwriting requirements.
  • Your total debt does not exceed 55 percent of your monthly gross income.

As with any loan forgiveness action, the short refinancing under this program may be reflected as a negative feature on a borrower's credit score. Please consult with your tax advisor regarding the cancellation of a debt and possible tax consequences.