The Federal Housing Finance Agency (FHFA) and U.S. Treasury have introduced a new loan modification program aimed at mortgages owned or guaranteed by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.
"The program targets the highest-risk borrower who has missed three payments or more, owns and occupies the property as a primary residence, and has not filed for bankruptcy," explained James B. Lockhart, director of the FHFA. "To be considered for the program, a seriously delinquent borrower should contact his or her servicer and provide the requested income information. The program creates a fast-track method of getting troubled borrowers to an affordable monthly payment, where 'affordable' is defined as a first mortgage payment - including homeowner association dues - of no more than 38 percent of the household’s monthly gross income.
"This affordable payment will be achieved through a mix of reducing the mortgage interest rate, extending the life of the loan or even deferring payment on part of the principal," he continued. "Servicers will have flexibility in the mix used to get there, but the goal is to create a more affordable payment."
Fannie and Freddie are expected to issue specific program guidance to servicers by Dec. 15. Servicers will receive a fixed payment of $800 per loan modified.
Lockhart's full statement is available at www.fhfa.gov.
Residential Mortgage
