FHA Streamline Refinance?

[studbucket]

For 1-2 years now I've been receiving scam-looking letters in the mail, telling me I'm qualified to re-fi for a much lower rate. I've pretty much always tossed them away, but today I decided to look more into what's going on.

I'm obviously not going to use one of those "scam" lenders, but it would appear I do qualify for an FHA Streamline Mortgage, and there's more info here: HUD Streamline Your FHA Mortgage

I ask because we are about $25,000 "underwater" on our property. The market was low when we bought, but it's gotten lower. We also have a rate of 4.875%, but I'm seeing rates around 3.5%, which would be awesome to get.

So I want to know:

• Do I qualify?
• What are the catches here?
• Can you tell me more?

Thanks!