Freddie Mac’s and Fannie Mae’s Streamline Loan Modification Program
What is the Freddie Mac and Fannie Mae Streamline Loan Modification Program?
A new loan modification process created last year on July 1, 2013 has enabled mortgage borrowers with Fannie Mae or Freddie Mac loan to more easily pursue loan workout options with their mortgage servicers. More guidelines were added to this program this past January, 2014. I will explain these changes in summary below to get you up to speed on these sweeping changes.
Unlike HAMP, this new program requires no documentation of a hardship. By getting homeowners back on track through the means of getting them to make three trial payments on time, loan modifications are easier to obtain then they were years ago. Although the traditional financial hardship evidence isn’t required, homeowners must be at least 90 days behind on their loans, but no more than 720 days delinquent in order to be eligible. In addition, the mortgage must be a first-lien note that is at least a year old and the amount remaining on their mortgage must be a minimum of 80% of their property value.
The origin of this new loan modification program stems from the $25 billion dollar National Mortgage Settlement. In this settlement, the Attorney Generals in 49 states got the nation’s five largest mortgage lenders to pay out billions for their foreclosure abuses on American homeowners. The nationwide settlement has resulted in the government creating a variety of new mortgage regulations in 2013 which include improvements in the loan modification sector. Even more regulations were created this January. A loan modification database of all these regulatory changes can be found on this OCC page.
Under Freddie Mac’s and Fannie Mae’s Streamline Loan Modification Program, borrowers must:
– Be 90 days to 720 days delinquent on their mortgage
– Have had their loan originated within the past year (12 months)
– Contain a principle and interest that is less than or equal to the current contractual P&I payment.
– Have a conventional first lien mortgage owned by Fannie Mae or Freddie Mac.
For HAMP, borrowers must:
– Have obtained a mortgage loan on or before January 1, 2009.
– Owned up to $729,750 on a primary or single unit rental property; up to $934,200 on 2-unit rental properties; up to $1,129,250 on 3-unit rental properties and $1,403,400 on all 4-unit rental properties
– Possess a property that has not been condemned
– Have gone through a financial hardship that has left them delinquent or in danger of defaulting on monthly payments
– Contain a well documented income
– Possess zero convictions of a felony, larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.
Although new loan modification requirements and standards that started last year in 2013 cut down the amount of documents borrowers must provide, there is still a substantial amount of finances a borrower must provide evidence of to satisfy the loan modification process.
HAMP provides a link to a useful tool, that borrowers can use to see if they pre-qualify for the program.
By Moe Bedard
Founder at LoanSafe.org
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. I currently live in Carlsbad, California with my beautiful wife and children.
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