The  two Government-sponsored enterprises (GSEs), Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation), announced on Tuesday that they are changing the way they modify some mortgages.

The reason for the change is because many of the loans previously modified under the Home Affordable Modification Program or “HAMP” were often fixed for only five years. Many of these homeowners are now struggling, or simply cannot make their higher monthly mortgage payments once their rates had adjusted upward.

I have witnessed this fact time and time again by struggling homeowners in our LoanSafe forum. In order to reduce the risk of re-defaults on some of these scheduled interest rate adjustments on these previously made loan mods, Fannie Mae and Freddie Mac will start streamlined modifications for qualified borrowers due for a rate reset.

As part of the new initiative, they have directed mortgage servicers to start evaluating borrowers on July 1, 2015 for their eligibility for a streamlined modification if they become 60 days delinquent within 12 months after a step rate increase to their HAMP modified mortgage’s interest rate.

Servicers must also consider the borrowers for a new loan modification for borrowers who are current on their modification payments after the reset, but are in danger of falling behind, as long as the borrowers have less than $25,000 in cash reserves.

 

 

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.