The Federal Housing Finance Agency (FHFA) rolled out a new simplified program to help homeowners keep their homes and avoid foreclosure. It’s called the Streamlined Modification Initiative and the program went into effect July 1st and will expire August 1st, 2015. It’s a lot like the mortgage modification programs of the last few years with one key difference – a huge reduction in paperwork.
If you’re a borrower who is at least 90 days behind on payments on a mortgage owned or guaranteed by Fannie Mae (check your loan) and Freddie Mac (check your loan), you’ll start to get offers from lenders to try this program. The key difference in this program is its simplicity, you simply need to make the new payments for a trial period of 3 months and then the modification is permanent. There’s no evaluation of eligibility (no need to prove hardship), there is no need for documents, no back and forth and red tape.
The only other requirements are that the loan must be at least a year old, the borrower has to be less than 24 months (the official term is 90-720 days delinquent) behind and their loan balance must be 80% or more of the home’s value (80%+ LTV). Also, if your loan has been modified at least two times before then you are not eligible.
If you are eligible, your mortgage servicer will send you a latter that details the terms of the modification as well as the trial payments. To start, you just pay the new payment. Make three payments and the modification is permanent. If you don’t make all three, you don’t get the modification.
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