If you want to keep your home, but don't have enough equity to get into an FHA refinance loan, you have tried a loan modification or normal FHA refinance and it didn't work, then an FHA short refinance is your answer. You may be able to get your LTV (loan to value) right where you need it to be in order to qualify for an FHA refinance! It's a well known fact that there are companies out there that will do foreclosure bailouts, but the main draw back is that the LTV needs to be between 50% - 60%, with most lenders tightening there belts down to the 50% notch. Most homeowners have LTV's between the 75% - 100+% range. The problem with this is that most lenders won't accept them unless it is an FHA short refinance. Therefore, by negotiating an FHA short-refi with your current lender, you can obtain a short payoff of less than the full amount owed, getting your LTV where it is needed to refinance your home with FHA. Thus, also creating equity in your home, where before you had little or none and that makes the FHA happy as well.
FHA short refinance is the way to go.