(NOTE: comments in parenthesis are my cynical responses.)
The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will offer a new, simplified loan modification initiative to minimize losses and to help troubled borrowers avoid foreclosure and stay in their homes.
(So, since the first several attempts were dismal failures, they are going to try again?)
Beginning July 1, 2013 servicers (i.e., the folks who service your loan) will be required to offer eligible borrowers who are at least 90 days delinquent on their mortgage an easy way to lower their monthly payments and modify their mortgage without requiring financial or hardship documentation.
(Wait.  You have to be at least 90 days delinquent?  So, are they encouraging people NOT to make their loan payments to be able to get a loan mod?  Really?)
(Seriously?  “an easy way” … when have any of these programs ever been consumer-friendly?)
The new Streamlined Modification Initiative eliminates the administrative barriers associated with document collection and evaluation. Eligible borrowers must demonstrate a willingness and ability to pay by making three on-time trial payments, after which the mortgage will be permanently modified. Homeowners are encouraged to continue working with their servicer to evaluate all of their foreclosure prevention options. Documenting income and financial hardship could result in a modification with additional savings for the borrower.
(OK.  So, the struggling borrower is given a new, lower monthly amount.  The borrow has to make three on-time payments.   Presumably three-in-a-row.)
Under the Streamlined Modification Initiative, many borrowers who are at least 90 days delinquent will be sent a Streamlined Modification Solicitation Offer that includes a Trial Period Plan specifying the dollar amount of the new mortgage payment based upon a fixed interest rate, extending the payment terms to 40 years, and providing principal forbearance for certain underwater borrowers.
Borrowers will not be required to document their hardship or financial situations to receive the Streamlined Modification”…… under the following criteria
·         The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
·         Homeowners must be 90 days to 24 months delinquent
·         Have a first-lien mortgage that is at least 12 months old with a loan-to-value ratio equal to or greater than 80 percent.
(ah!  Don’t come asking for help.  The servicer, the folks who have been so helpful in the past, will seek you out.  Riiiight.  I’ll just sit right here and not do anything else since they will be calling any minute now.
And, if the back-end investor isn’t Fannie or Freddie … well, just never mind then.)
Here’s the link if you’d like to read the entire press release:
FHFA Announces New Streamlined Modification Initiative     http://www.fhfa.gov/webfiles/25068/StreamlinedModInit32713Final.pdf