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New streamlined fannie mae and freddie mac modification updates - no hardship docs, no income docs?

Discussion in 'Loan Modification' started by LoanModHelpCenter.com, Mar 27, 2013.

  1. LoanModHelpCenter.com

    LoanModHelpCenter.com Loan Mod Expert

    NEW STREAMLINED FANNIE MAE AND FREDDIE MAC MODIFICATION UPDATES - NO HARDSHIP DOCS, NO INCOME DOCS?
    just came out today, i had hoped that freddie and fannie would get rid of hardship and income documentation requirements when i wrote this article back on april 11 2012 and it looks like they did just that:

    From Freddie Mac today and this policy becomes effective July 1st 2013, so if you are missing April, May and June's payments, you will be eligible July 1st if you have made at least 12 consecutive on time payments since you first received your Freddie Mac loan:


    The Streamlined Modification will target borrowers who are at least 90 days delinquent on mortgages that are at least 12 months old, and meet other eligibility criteria


    Eligible borrowers are not required to submit documentation, but can accept a Streamlined Modification offer simply by making the trial period payments. The modification becomes permanent once the borrower demonstrates their ability to pay by completing the trial period

    The Streamlined Modification offers the same mortgage terms as the Standard Modification Freddie Mac announced in September 2011, which enables servicers to reduce a borrower's monthly mortgage payment by adjusting interest rates, extending payment terms to 40 years, and providing principal forbearance for certain underwater borrowers.

    Use of the Streamlined Modification Solicitation Letter and the Streamlined Modification Trial Period Plan Notice is optional and may be altered at the Servicer’s discretion as it deems necessary to meet the requirements of the Guide and to comply with disclosure and other requirements under applicable law.


    If the Borrower qualifies for a HAMP modification and the post-modified monthly principal and interest payment under the HAMP modification is less than the principal and interest payment available under the Streamlined Modification, the Servicer must offer the Borrower the HAMP modification.

    Servicers must send a HAMP Agreement Cover Letter (Form 1118) to the Borrower indicating that a restart of the Trial Period is not required and if the Borrower complies with the terms of the Streamlined Modification Trial Period Plan and executes the Home Affordable Modification Agreement (Form 3157), he or she will receive the HAMP modification terms.

    The Servicer must require the Borrower to continue making the Streamlined Modification Trial Period Plan payments and send the Borrower a Home Affordable Modification Agreement reflecting HAMP modification terms upon successful completion of the Streamlined Modification Trial Period Plan.

    The Servicer must convert the existing Streamlined Modification Trial Period Plan to a HAMP Trial Period Plan in Workout Prospector. The Workout Prospector® Users’ Guide will be updated to provide additional instruction for this purpose once Workout Prospector has been updated.If the Borrower does not qualify for a HAMP modification based on a review of a complete Borrower Response Package received during the Trial Period, the Servicer must communicate to the Borrower verbally or in writing the Borrower’s ineligibility for HAMP, and reconfirm that if the Borrower complies with the terms of the Streamlined Modification Trial Period Plan and returns an executed modification agreement, the Mortgage will be modified under the terms of the Streamlined Modification.from the servicing guide announcement at fannie mae MArch 27th, 2013:

    Fannie Mae is introducing a new mortgage loan modification, Streamlined Modification, which targets borrowers whose mortgage loans are at least 90 days delinquent and who meet the eligibility requirements provided below.

    Prior to and after offering a Streamlined Modification, a servicer must continue to comply with the delinquency management and default prevention requirements in the Servicing Guide, as updated through this Announcement.

    The policies in this Announcement apply to all conventional mortgage loans held in Fannie Mae’s portfolio and to mortgage loans that are part of an MBS pool that have the special servicing option or a shared-risk MBS pool for which Fannie Mae markets the acquired property.

    Servicers are encouraged to implement the Streamlined Modification policies immediately; however, servicers are required to implement these policies for borrowers who are eligible for a Streamlined Modification on or after July 1, 2013. The Streamlined Modification will expire on August 1, 2015; therefore, all Streamlined Modification Trial Period Plans must have an effective date on or before August 1, 2015.

    Eligibility requirements - Mortgage loans must satisfy all of the eligibility requirements shown below to be eligible for a Streamlined Modification.

    - must be at least 90 days delinquent, but no more than 720 days delinquent;

    - must have a pre-modified mark-to-market loan-to-value ratio (the gross unpaid principal balance of the mortgage loan divided by the current value of the property), greater than or equal to 80%; and

    - must be a first-lien mortgage loan.

    Fannie Mae is eliminating the requirement that the standard mortgage loan modification results in a P&I payment reduction of at least 10%. Instead, Fannie Mae is now requiring that the standard mortgage loan modification result in a P&I payment that is less than or equal to the pre-modification P&I payment.

    To be considered eligible for a Streamlined Modification, a complete Borrower Response Package is not required.

    Borrowers will continue to be eligible for the Streamlined Modification even if a payment is received following the borrower evaluation or solicitation that results in the borrower subsequently becoming less than 90 days delinquent. However, the borrower must be at least 30 days or more delinquent prior to the commencement of the Streamlined Modification Trial Period Plan.

    Eligibility Exclusions:

    The mortgage loan was previously modified under the Fannie Mae standard modification payment structure described in the Servicing Guide, Part VII, Section 602: Mortgage Loan Modifications, and became 60 or more days delinquent within 12 months of the modification effective date.

    The mortgage loan origination date was less than 12 months prior to the date of evaluating eligibility for a Streamlined Modification.

    The mortgage loan was previously modified two or more times, regardless of the modification program or dates of prior modifications.

    The borrower previously failed a Trial Period Plan under a Fannie Mae standard modification payment structure within 12 months of evaluating eligibility for a Streamlined Modification.

    The calculated Streamlined Modification monthly principal and interest (P&I) payment is greater than the borrower’s current contractual P&I obligation.

    The mortgage loan is insured or guaranteed by a federal government agency (e.g., FHA, VA, or Rural Housing).

    The mortgage loan is subject to:

    a recourse or indemnification arrangement under which Fannie Mae purchased or securitized the mortgage loan or that was imposed by Fannie Mae after the loan had been purchased or securitized;active nonroutine litigation described in the Servicing Guide, Part VIII, Section 101: Routine vs. Nonroutine Litigation;a current offer for another modification or other foreclosure prevention alternative, such as a forbearance or repayment plan;an active and performing Trial Period Plan; an approved liquidation workout; or an active and performing forbearance or repayment plan, unless otherwise directed by Fannie Mae.

    The borrower previously defaulted on either a Streamlined Modification Trial Period Plan or a Streamlined Modification.

    The mortgage loan is on the most recent Fannie Mae Non-Eligible List, located on Fannie Mae’s website, at the time the servicer is evaluating eligibility for solicitation. If a mortgage loan is on Fannie Mae’s Non-Eligible List, the servicer must pursue receipt of the Borrower Response Package to evaluate the borrower for another foreclosure prevention alternative in accordance with the requirements in the Servicing Guide.

    Servicers are required to check all mortgage loans that become 90 days delinquent against Fannie Mae’s Non-Eligible List prior to sending the borrower an initial or any subsequent Streamlined Modification Solicitation Letter as set forth in this Announcement. Mortgage loans not meeting the eligibility requirements for a Streamlined Modification must be evaluated for another type of modification or other foreclosure prevention alternative, provided the borrower submits a complete Borrower Response Package.

    Once the Streamlined Modification Solicitation offer is accepted, follow-up solicitations for incomplete Borrower Response Packages are not required. If the borrower does not accept the offer, then the servicer must resume follow-up solicitation for the incomplete documentation in accordance with the Servicing Guide.

    If the borrower qualifies for a Fannie Mae HAMP modification with a post-modification monthly P&I payment lower than the P&I monthly payment offered under the Streamlined Modification, the servicer must send a new offer to the borrower indicating that the borrower qualified for a Fannie Mae HAMP modification with a lower P&I payment.

    The offer letter must indicate that if the borrower chooses to accept the Fannie Mae HAMP modification, the borrower will not be required to complete a new HAMP Trial Period Plan at the conclusion of the Streamlined Modification Trial Period Plan, but will execute a Modification Agreement under the terms of the Fannie Mae HAMP modification program upon successful completion of the Streamlined Modification Trial Period Plan.

    If the borrower does not qualify for a Fannie Mae HAMP modification with a post-modification P&I payment lower than the P&I monthly payment offered under the Streamlined Modification, or if the borrower fails to return a complete Borrower Response Package within the prescribed timeline provided in the Streamlined Modification Solicitation Letter (and as a result is not eligible for a Fannie Mae HAMP modification), the servicer must also communicate to the borrower that he or she is not eligible for a HAMP modification.

    The servicer, however, must communicate to the borrower that he or she continues to be eligible for the Streamlined Modification, and that if the borrower makes the trial payments in accordance with the requirements of the Streamlined Modification Trial Period Plan previously provided to the borrower, the mortgage loan will be permanently modified pursuant to the terms of the Streamlined Modification Trial Period Plan. As provided in the Servicing Guide, the servicer must comply with all applicable laws in connection with processing the Streamlined Modification.

    Streamlined Modification Terms:The servicer must comply with the requirements described in the Servicing Guide, Part VII, Section 602.02.05:

    Conventional Mortgage Loan Modification Terms, to determine the mortgage loan modification terms for a Streamlined Modification Trial Period Plan.

    Completing the Modification:

    Upon successful completion of the Streamlined Modification Trial Period Plan, the servicer will document and process the permanent modification in accordance with the applicable requirements in the Servicing Guide, based on the borrower’s qualification for a Streamlined Modification or Fannie Mae HAMP Modification, as described above. (For the Streamlined Modification, the servicer should refer to Part VII, Section 602.02.07: Executing and Processing the Loan Modification Agreement. For a Fannie Mae HAMP modification, the servicer should refer to Part VII, Section 609.03.06: Executing the HAMP Documents.)

    Postponing Referral to Foreclosure or Foreclosure Proceedings:

    Servicers must comply with the requirements in the Servicing Guide, Part VIII, Section 106: Referral to Foreclosure Attorney/Trustee and Section 107.01: Servicer-Initiated Temporary Suspension of Proceedings, in connection with offering Streamlined Modifications.

    Streamlined Modification Incentives:

    Fannie Mae will pay the servicer an incentive fee consistent with the tiered incentive structure for the Fannie Mae standard modifications as described in the Servicing Guide, Part VII, Section 602.04.05 titled Incentives.Any Streamlined Modification Trial Period Plan entered into by the borrower shall count towards the servicer achieving the minimum incentive benchmark (as described in the Servicing Guide, Part VII, Section 205.05:

    Servicer Incentives and Compensatory Fees for Borrower Response Packages) upon the servicer’s entry of the associated case into the Home Saver Solutions Network (HSSN).Servicers will be paid a $500 incentive fee only for collection of a complete Borrower Response Package, provided the collection is reported to Fannie Mae in accordance with the Servicing Guide.

    Mortgage Insurer Approval:

    As a reminder, Fannie Mae has obtained delegations of authority with mortgage insurance companies so that servicers can more efficiently process modification requests without the need to obtain mortgage insurer approval on individual mortgage loans. A list of these mortgage insurers is posted on Fannie Mae’s website. For mortgage insurers not on this list, servicers must continue to obtain their approval on a case-by-case basis.Freddie and Fannie we will be using all the tools available to us to screen for potential strategic defaulters known as the "HAMPster Wheel" participants on this forum.
  2. RexMorgan

    RexMorgan LoanSafe Member

    Great news. Got some questions...

    This is great info! I think it will help me, but I've got a few questions.

    My situation:
    Home's in CA. Zillow has it worth about $245k. We've lived in it about 7 years.
    1st:
    - $340k
    - Purchase money
    - Seterus serviced / Fannie Mae owned
    - I/O for about another year
    - variable, currently at 2.50%
    - $770/mo
    2nd:
    - $110k
    - Refinanced my original HELOC and took money out to pay off CCs
    - CitiMortgage owned and operated
    - 30 year fixed at 7.5%
    - 775/mo
    I'm thinking about getting a new house and renting this house out.

    Here are my questions:
    Would this mod. option be available to me if it's a rental?

    Could it be based on my I/O payment if we apply before it increases on us? That is, when they use all these methods to see if they can get my payment lower, will they be looking at my I/O payment if that's what we're paying at the time? Or would we have to wait until our loan goes interest / principle?

    This mod option is not available until I become 90 days late, right?

    Other than the lates, does taking this mod. option ding my credit at all?

    Thanks,

    Rex
  3. indeep1959

    indeep1959 LoanSafe Member

    This does "sound" like great news but due to the lack of enthusiasm on the forum for this news, I'm guessing it's too little too late?

    I'm 24 months behind and this would be perfect for me, but, since it doesn't start till July, that would put me out of qualifying for yet another program.
    A call to Bank of America yesterday and they didn't even know about it yet so probably too late for me.

    As for the above poster, why haven't you applied for a HAMP mod? Are you current? Intentionally defaulting just to get this mod is not guaranteed, I'd try to work something out for a regular mod.
    As for your credit, you will get dinged for the lates but once you "catch up" or mod, you're credit will show that you are current again eventually.

    I wouldn't tell the bank you're planning to rent this place out, just do it later after your mod is final.
  4. RexMorgan

    RexMorgan LoanSafe Member

    Thanks indeep. That stinks if you just miss this, but maybe as the official implementation date gets closer, they'll start doing it. No kidding about the lack of enthusiasm.

    As for me, I'm not late yet, but going to try a modified 'buy and bail'... more like 'buy, rent, settle our 2nd and then see what happens' strategy. I'm thinking at this point that we'll probably lose the house in the end, but I'd like to keep it if it makes sense. We don't qualify for HAMP because I'm making too much now. I was out of work for 6 months a year ago and should have tried something then, but I was just panicking. We managed to keep up payments but lost our savings and got in deep CC debt.

    Well, enough of the sob story. What happened, happened and I'm grateful for the options we have now.

    Anyone know have insight to the I/O questions? Getting a fixed rate somewhere in line with my I/O payment would make it possible to hold onto.

    Thanks, Rex
  5. jhn_plsn

    jhn_plsn LoanSafe Member

    And for those in BK attempting to save the house, your on your own. AGAIN!!!
  6. sethelle

    sethelle LoanSafe Member

    I was researching this and where did you find the "least 12 consecutive on time payments" at? I can't find anywhere and only read, had the loan for 12 months. I was at 11 months consecutive on time and stopped paying in March.

    Thanks
  7. Cat Damiano

    Cat Damiano Mortgage Wars

    [h=3]Eligible Property Types[/h] The following property types are eligible for the Streamlined Modification:

    • A primary residence, second home or an investment property (i.e., owner-occupied or non-owner-occupied).
    • Vacant properties, including condemned properties.


    [h=3]Borrower Eligibility[/h] Borrowers may be eligible for this modification if they meet the following requirements:

    • The borrower must be 90 days to 720 days delinquent.
    • The pre-modified mark-to-market loan-to-value (MTMLTV) ratio (gross unpaid principal balance of the current loan, including any principal forbearance as a result of a prior modification, divided by the property value obtained in accordance with Guide Section B65.16, Property Valuation Requirements) must be greater than or equal to 80 percent.
    • The mortgage originated at least 12 months prior to the evaluation date for the modification.
    • The principal and interest (P&I) payment must be less than or equal to the pre-modification principal and interest payment. (Note: The P&I payment does not need to be a 10 percent reduction.)
    • The mortgage is a conventional first-lien mortgage currently owned, guaranteed, or securitized by Freddie Mac.
  8. BofA ThatDeluxeAptInSkyWA

    BofA ThatDeluxeAptInSkyWA LoanSafe Member

    Can the loan be modified even if there is a 2nd mortgage? (purchase money)
    Thanks
  9. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Yes, having a 2nd mortgage will have no effect on qualifying for a loan modification.. Most people who pursue loan modifications on their 1st also have a 2nd mortgage attached to their property..
  10. BofA ThatDeluxeAptInSkyWA

    BofA ThatDeluxeAptInSkyWA LoanSafe Member

    Thanks for the reply this is good to hear.
  11. BofA ThatDeluxeAptInSkyWA

    BofA ThatDeluxeAptInSkyWA LoanSafe Member

    Has anyone been offered help through the Streamlined program?
    Last edited by a moderator: Jun 27, 2013
  12. BofA ThatDeluxeAptInSkyWA

    BofA ThatDeluxeAptInSkyWA LoanSafe Member

    Here is some more info I dug up. This was posted on the net just 7 days ago. New details emerging.

    <nyt_text>Homeowners who have fallen behind on their mortgage payments should check their mail carefully in coming weeks. Lenders will be offering loan modifications without even being asked.
    </nyt_text>

    Under a new Streamlined Modification Initiative announced by the Federal Housing Finance Agency, mortgage servicers must now offer borrowers who are 3 to 24 months delinquent a plan to help avoidforeclosure.
    Unlike the Home Affordable Modification Program, an earlier government initiative known as HAMP, this one carries no burdensome documentation requirement. Borrowers may be approved without providing any proof of financial hardship.
    The elimination of paperwork coupled with a proactive approach should benefit borrowers, said Timothy M. Dwyer, the chief executive of Entitle Direct, a direct-to-consumer title insurance company. “All it takes is for the borrower to make that new payment and they’re in the trial period of the program,” he said. “It can’t be any more simple than that. There’s not even a requirement that you sign something, send it in and have it approved.”
    Borrowers must make three monthly payments on time before the modification becomes permanent. The program applies to loans owned or guaranteed by Fannie Mae or Freddie Mac. The start date was to be July 1, but an agency spokesman said Fannie and Freddie had already begun the program. It expires Dec. 31, 2015.
    The program applies to primary residences, investment properties and second homes. Borrowers may have up to 20 percent equity in the property.
    The intention is to get distressed borrowers into modified loans early enough to keep them out of foreclosure. The formula used to calculate the new payment is the same as for standard modifications under Fannie and Freddie, said Diane Cipollone, the director of the Fair Lending Training Program for the National Fair Housing Alliance. That formula is not based on income and affordability, so not all borrowers will necessarily find that the new payment amount makes an appreciable difference in their financial circumstances.
    “The payment that results merely has to be equal to or less than the unmodified payment,” Ms. Cipollone said.
    One category of borrowers likely to benefit from the streamlined program includes those who fell behind because of “a big interruption in income or some unexpected expense, and but for the arrears, they’re back on track,” she said. Under the modification formula, the arrears are added to the loan balance and the term extended to 480 months. The interest rate is currently about 4 percent.
    Borrowers who are “underwater” — or owe more than their homes are worth — will not pay interest on up to 30 percent of the unpaid loan balance. The program does not allow for a reduction in the principal balance, however.
    The solicitations being mailed to borrowers will also include information about HAMP. Borrowers may apply for a HAMP modification and still begin making payments under the streamlined program, Ms. Cipollone said.
    HAMP may save more money for qualifying homeowners because the payment is based on 31 percent of gross monthly income. But Ms. Cipollone says it is restricted to loans originated before Jan. 1, 2009; the streamlined program applies to loans held for at least a year.
    Mr. Dwyer said it would be interesting to see if the new program was any more effective than HAMP at keeping people in their homes. A report from the special inspector general for the Troubled Asset Relief Program found that homeowners who received HAMP modifications in 2009 defaulted at a rate of roughly 40 percent.
  13. sethelle

    sethelle LoanSafe Member

    I requested this from US bank about a month ago and they had no idea what this was.
    Today I asked again because they JUST sent my file to an UW and also referred me for foreclosure one day apart from each other and was told NO because they now the package is marked complete and they will not offer this to me. Instead I get to wait 45-60 days for an UW to say No, then maybe they will offer this after they say I don't qual the reg way. In the meantime they tack on late fees, interest, corp advance when I was only 30 days late, and now fees called "other".
  14. Cat Damiano

    Cat Damiano Mortgage Wars

    The eligibility for this program doesn't begin until July 1st. Is your loan Fannie Mae or Freddie Mac?
  15. Jeffrey L. Shurtliff

    Jeffrey L. Shurtliff LoanSafe Member

    This is the same ole story different channel. You must be in default to be eligible. Freddie has the same situation attached to HAMP in the beginning. They will wait for the default to build and then foreclose on most. Bait and Switch.
  16. sethelle

    sethelle LoanSafe Member

    It is freddie, I meet the criteria. US bank is playing games. They ask for something then u submit and they ask for something else,etc etc. Every 2 weeks they want something different, new apps new 4506 or something they else. They even once said i had no app and closed the file then i had to call to reopen, they found the app right there in the uploads.
    They sent me to foreclosure referral because they said my file wasn't complete the same day they asked for my signature and date to be in a different place on my P & L.
    My first late was March but apparently because I asked for help last year and they sent me app which I returned THEN was able to make my payment and only had a 30 day late they denied my request saying not in imminet default. Well yeah I made the payment on the 34th day with a tax return. SO that apparently is considered a previous denial and because I was 90 late and had a previous denial (over a year ago) they sent me to foreclosure referral. If I never asked for some assistance i guess they wouldn't have sent me yet but that and the processor messing up for 2 months makes me foreclosure referral.

    I just want the streamline mod so I don't die from stress.
  17. Cat Damiano

    Cat Damiano Mortgage Wars

    I realize that you want to be considered for the Streamlined Modification, but the lender did not have to offer this option until July 1st, so as of tomorrow if you meet the eligibility requirements, it must be offered to you.

    The criteria is here;

    http://www.freddiemac.com/singlefamily/service/docs/streamlined_mod_fact_sheet.pdf


    If after July 1st the lender is not offering this to you and you meet the eligibility requirements, then you may want to contact Freddie Mac directly;

    Who to Contact for Help - Freddie Mac
  18. BofA ThatDeluxeAptInSkyWA

    BofA ThatDeluxeAptInSkyWA LoanSafe Member

    I read the Freddiemac guideline per the link above.

    I wonder what exactly they mean by:

    • Includes ineligibility requirements designed to
    discourage borrowers from purposefully missing
    payments to obtain the Streamlined Modification

    What are they looking for? How do they know if someone is strategically defaulting or not?
  19. Jeffrey L. Shurtliff

    Jeffrey L. Shurtliff LoanSafe Member

    These corps have their own investigative units. Corporations have many resources. This one blocks me on twitter as they cannot take the truth showing what they really want. They come across as, " hey we are the good guys, we are here to help." Yep. they will help you right out of your house.
  20. BofA ThatDeluxeAptInSkyWA

    BofA ThatDeluxeAptInSkyWA LoanSafe Member

    Good point. Not surprised though.

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