What the FHFA Streamlines Loan Program can mean to troubled homeowners.
The FHFA has announced details of a streamlined loan modification program similar to the one in place at Indymac Federal Bank, aimed at helping seriously delinquent borrowers.
The program is a collaboration of the FHFA (Fannie and Freddie’s new regulator), FHA, Treasury, and Hope Now along with its 27 servicer partners, but does not provide any direct government assistance.
To be considered for the program, borrowers must own and occupy the property as their primary residence, be 90 days or more behind on their mortgage, and must not have filed for bankruptcy protection.
They must also prove that they have experienced a “hardship or change in financial circumstances” and did not purposely default on the mortgage to receive assistance.
Under the program, borrowers will work with their servicers to establish an affordable monthly mortgage payment, determined as no more than 38 percent of the household’s monthly gross income.
The affordable payment will be achieved by reducing the interest rate on the loan, extending the life of the loan, or deferring payments, but no principal reductions will be permitted!
While no foreclosure moratorium has been put in place, borrowers who remain in contact with their servicers during the modification process may have any planned foreclosure sale suspended.
To encourage participation, servicers who take part will receive $800 for each loan modified through the program.
The program is expected to be launched by December 15th.