Fannie Mae Servicers Can Now Do Streamlined Loan Modification
Yesterday marked the first day that Fannie Mae servicers could offer streamlined mortgage loan modification through the Streamlined Modification Program (SMP) that was announced back in November. The program, reports Market Watch, is designed to help home owners in danger of foreclosure get loan modification more quickly:
The SMP is designed to be a streamlined process for modifying the loans of a large number of borrowers who are delinquent in their mortgage payment and may be able to avoid a foreclosure through the program. As FHFA has indicated, SMP was intended to help set standards in the mortgage servicing industry for conducting loan modification programs on a large scale as a foreclosure prevention measure.
Fannie Mae has been working with FHFA and 27 lenders and servicers in the HOPE NOW alliance to implement the SMP. Under the program, borrowers who meet certain eligibility criteria and demonstrate financial hardship may be eligible for a loan modification that reduces their monthly principal and interest payment. The streamlined process allows a borrower to sign a single document at the outset of the workout process that both establishes a new monthly payment during a three-month trial period, and sets forth the modification terms that will take effect if the borrower makes the new payments during the trial period. The program is available to borrowers who have missed at least three monthly payments on their existing mortgages.
Unfortunately, it is unsure how much help the loan modification program will have on the foreclosure crisis, since the program is voluntary. There is also concern that, with the economy, mortgage loan modification merely delays the inevitable as more people’s jobs and finances become at risk.
What do you think of mortgage loan modification?
