twitter linkedin
facebook google+

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from

Mortgage News Reprints
Put entire stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed stories free on your Web site or for your RSS reader.

News Archives
Archive of stories by month going back to 1999.

Press Releases
Reports and announcements from

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News


Mortgage News

HOT Topics









site map

Loan Modification News
Loan modification activity, reports and legislation.

Streamlined Conforming Modifications Go Live

Fannie, Freddie release streamlined modification program guidelines

December 16, 2008

By staff

Fannie Mae and Freddie Mac have released details on the recently unveiled streamline modification program for conforming borrowers.

Fannie outlined guidelines for streamlined modifications on Friday in Announcement 08-33. All approved servicers are eligible for the streamlined program.

The streamlined program was originally announced last month by the Federal Housing Finance Agency, which regulates the two secondary lenders and the Federal Home Loan Banks.

The modifications temporarily run for three months on a trial basis then become permanent if the payments are kept current during the trial period. Form 3169, a proposed Multistate Streamlined Modification Program Loan Workout Plan and Modification Agreement, is signed at the outset of the trial detailing the modification terms. A hardship affidavit is also required.

The form must be returned within 14 calendar days. Servicers should treat loans in the trial period as they would a loan in forebearance. When an interest rate adjustment is scheduled during the trial period, servicers should offer a three-month forebearance.

Borrowers who were previously discharged from Chapter 7 bankruptcy must sign a statement that acknowledges he or she will not have personal responsibility under the new agreement.

Except for the foreclosure sale, servicers should continue the foreclosure process during the trial period if it has already been initiated. In some cases, the modification must be recorded once it becomes permanent.

Qualified borrowers cannot be in litigation, in bankruptcy or on an existing workout plan and must be at least three months delinquent or in foreclosure on their owner-occupied first mortgages -- including jumbo loans. FHA and VA loans are ineligible. Only 1-unit properties are eligible, and the loan-to-value on a mark-to-market basis must be at least 90 percent. Broker price opinions are acceptable for determining the current value, though automated valuation models are unacceptable.

In its own servicer bulletin, Freddie noted that subordinate liens may be left outstanding and cannot be considered in the LTV calculation.

Fannie said escrow accounts must be established, and the servicer must fund any shortages. Borrowers have 60 days to repay escrow account shortages. The lender cannot require up-front cash contributions except for the first modified payment. Late fees and penalties must be waived.

Streamlined modifications require a recent paystub and verbal income verification to determine that the proposed payment, including escrow, doesn't exceed 38 percent of gross monthly income. Self-employed borrowers must provide their most recent tax returns.

Under the plan, accrued interest, out-of-pocket escrow advances and costs must be capitalized. If this causes the payment ratio to exceed 38 percent, then the lender can extend the term of the loan to 480 months.

If the ratio still exceeds 38 percent, then the interest rate can be reduced in 0.125 percent increments until the 38 percent ratio is reached. The lowest acceptable rate is 3.0 percent. Rates reduced to below the current market rate as reported in Freddie's Weekly Primary Mortgage Market Survey will only be in effect for five years then increased one percent annually until the market rate as of the modification date has been reached.

If the extended term and lowered rate fail to reduce the payment ratio to 38 percent, then principal forebearance can be used to bring down the ratio. The deferred principal is interest free and due in full either at the loan's maturity or the property's sale. Principal write-downs and principal forgiveness are prohibited.

While mortgage insurer approval is currently required on each deal, Fannie said it is working on a blanket delegation for all servicers from each mortgage insurance company.

Freddie said the program was effective yesterday for mortgage originated on or before Jan. 1, 2008.

Borrowers must be promptly notified in writing if they are denied for a streamlined modification. Servicers should seek another foreclosure alternative in these cases.


Streamlined Mods for Conforming Loans
Seriously delinquent mortgages under the management of Fannie Mae or Freddie Mac may qualify for modifications to the interest rate, remaining term or principal balance under a program unveiled today by federal regulators.

Fannie, Freddie to ease procedures

Servicing News | Servicer Ranking | Delinquency Statistics
Stories about mortgage servicers, delinquency and f o r e c l o s u r e s. Coverage of servicing lawsuits and loan servicing technology.

GSE News | Fannie/Freddie Share Statistics
Fannie, Freddie and FHLB news. Coverage of government sponsored enterprise regulation, operations and litigation.

Logout forgot

SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter


mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders