FHFA Streamlined Modification Initiative.
Receive assistance in modifying your home loan from the Federal Housing Finance Agency Streamlined Modification Initiative. The federal government FHFA organization is trying to provide mortgage assistance to hundred of thousands of homeowners and the program will help them reduce their payments. The initiative is being run in close partnership with Fannie Mae and Freddie Mac as well as many private lenders.
The federal government supported agencies are offering this streamlined plan to help those homeowners that are struggling. It may be able to assist families that are behind on their mortgage payments. The program eliminates all the paperwork and financial information that needed to be provided in the past and it can help borrowers qualify for an automatic reduction in their monthly payments.
The Streamlined Modification Initiative is only offered for homeowners whose loans are owned by the financial government supported companies Fannie Mae or Freddie Mac. However they currently own over 90% of all mortgages out there, so it is more than likely that almost all homeowners can explore this solution. However you can always call your bank's customer-service department or call the numbers below in order to learn who owns the loan on your home.
Application process and conditions of the initiative
The application process is very streamlined. It requires almost no paperwork or supporting documentation from homeowners. That's a be change from many other federal government and private lender modification programs, which tended to have required a ton of forms and paperwork to be completed. However there are some conditions that need to be met by Streamlined Modification Initiative applicants. They include some or all of the following.
- Your home loan needs to have originated over one year ago.
- The applicant needs to be at least 90 days behind on their mortgage but less then 24 months behind.
- The outstanding balance of your loan needs to be equal to 80 percent or more of the current value of your home.
- Loans that have been modified at least two times in the past are not eligible.
- While it may be hard to imagine, the FHA will not require employment verification. This is no longer required in order to refinance. In addition, your income does not need to be verified either. The FHFA will monitor your credit score using other means.
The program is truly targeted at those so called underwater borrowers and it can provide them with a better opportunity to stay in their homes. However the downside is it could open up a window for those who are unemployed, have poor credit or without an income to get mortgage help. Many people who fell into those categories helped created the housing crisis in the first place.
Assistance provided by the Streamlined Modification Initiative
If you apply and are found to be qualified, Freddie Mac will work with your bank or lender to provide relief. Fannie Mae will offer all or most of the following as well.
- The most common type of assistance provided is an extension of the repayment period of your mortgage. So additional years will be added to it. Some common solutions include extending a 30 year home loan to 40 years.
- Another common solution is to lower the interest rate. So for example a rate of 5.5 percent could be lowered to 4%.
Those who enroll need to pay their mortgage on time going forward. After three consecutive months of paying the new amount, the home modification becomes permanent. While the savings will vary, it is estimated that homeowners may save on average 30% on their current payment. However the exact reduction will vary and is based on many factors.
Individuals will be able to accept a Streamlined Modification Offer from Freddie Mac by simply making the trial period payments on time. They will also need to agree to the terms of the loan modification. Also, applicants will need to be advised of any more beneficial terms that are available to them in order to prevent a foreclosure if they document their financial situation.
Mortgage servicers are required to send the Fannie Mae Streamlined Modification Solicitation Offer to borrowers that the initiative’s eligibility requirements, including being at least 90 days delinquent. So while your bank or lender may notify you of this program, also feel free to call Freddie Mac at (888) 995-4673 or Fannie Mae at (800) 732-6643 to learn more or see if you can qualify for the initiative. Or inquire into other assistance programs that they administer or are aware of.
For example, the program can be combined with other government resources. In theory, homeowners can still sign up for HAMP / Home Affordable Modification Program as soon as they encounter a financial challenge. Then, after 90 days of being late on your mortgage payments, the FHA Streamlined Modification Initiative could be used as well. Be sure to explore the pros and cons of each option. HAMP may after all provide a more affordable monthly payment to the homeowner than the FHFA Streamlined Modification Initiative. Another point to consider is that borrowers may be eligible to receive a one time grant or financial incentive under HAMP.
This program gives struggling borrowers and delinquent homeowners with another path to save their home and avoid foreclosure. Dial (800) 732-6643 or (888) 995-4673 for more details.