Many times when I speak with someone about the “rules of loan modification”, I explain that there really are no rules – that the process varies from lender to lender.
With the announcement of a new “ Streamlined Loan Modification Program” from the government, I suspect that the rules of loan modification will become more clear for many people.
Fannie Mae has been working with FHFA and 27 different lenders and servicers in the HOPE NOW alliance to implement the Streamlined Loan Modification Program – so there is a great chance that your lender is participating.
Under the Streamlined Loan Modification Program, your mortgage and escrow payments can be cut to 38 percent or less of an eligible borrower’s gross monthly income by some combination of:
- reducing mortgage rates
- extending the mortgage term up to 40 years
- forbearing on a part of the principal amount until the loan is paid off, then a balloon payment is required
Streamlined Loan Modification Program Eligibility Requirements
- You must own and occupy the property as your primary residence
- You must have missed at least three mortgage payments
- You cannot have filed for bankruptcy
Streamlined Loan Modification Process – Trial Period
The streamlined process allows you to sign a single document at the outset of the modification process that establishes a new monthly payment during a three-month trial period, and also sets forth the modification terms that will be permanent if you make the modified payments during the trial period.
Who To Contact about the Streamlined Loan Modification Program
Borrowers should contact their servicers if they think they may qualify. At the same time, servicers will be identifying eligible borrowers and reaching out to them through the mail.
If an affordable payment cannot be achieved through the Streamlined Modification Program, lenders will still be working with people through the “traditional” modification process — or in other words, every situation is different and will be handled differently.
Other Streamlined Loan Modification Program Official Press Releases