If you have a mortgage insured by Fannie Mae or Freddie Mac and you have been thinking about modifying your loan, there may good news for you! Previous modification programs have not worked well or failed miserably. However, there is a new program developed by the Federal Housing Finance Agency, the agency formed to oversee Fannie and Freddie, which is designed to help homeowners struggling to make their payments. The good news is that if you qualify, you may be able to lower your mortgage payments without having to produce the mountains of paperwork required by the traditional loan modification programs.
The new program is called “Streamlined Modification Initiative.” Starting July 1, 2013, mortgage servicers must offer qualifying borrowers a program to lower their monthly mortgage payments. There are strict guidelines for this program and not all homeowners will qualify. The loan must be owned or guaranteed by either Fannie Mae or Freddie Mac. A homeowner must be at least 90 days late in making payments and the mortgage must be at least one year old with a loan-to-value ratio of equal to or greater than 80%. Homeowners whose loans have already been modified two or more times are not eligible for this program. The best news is this program does not require the borrower to produce the endless mounds of financial and hardship documentation required by the typical loan modification process.
Beginning July 1, servicing agents must review their loans to identify borrowers who fit the program’s parameters and send them an offer. The offer will include trial payments and the homeowner’s obligation is to accept and make the proposed trial payments. If you have a loan that is owned or insured by Fannie Mae or Freddie Mac, contact your lender as you may be eligible for this new program.