For a select number of struggling U.S. homeowners, life might get a little easier starting this week. The Federal Housing Finance Agency announced that it will be sending out notices to qualified borrowers about its new Streamlined Modification Initiative, a plan to help homeowners avoid foreclosure.
The new program is available to homeowners whose mortgages are backed by Fannie Mae or Freddie Mac and who are at least 90 days late on their payments. Borrowers must also have had their loans for a minimum of one year and may not be behind on their payments by more than 24 months. Their loan balances must also be 80 percent or more of the home’s value.
For those who meet all those requirements, the FHFA initiative will help them get a mortgage modification featuring a combination of longer loan terms and lower interest rates. They will not need to file any paperwork unlike with earlier programs. The hassle of paperwork was often the cause of many borrowers dropping out and the FHFA hopes this new tweak will encourage more homeowners to join in.
“The Streamlined Modification Initiative adds to the suite of home retention tools offered by Fannie Mae and Freddie Mac,” said FHFA Acting Director Edward J. DeMarco in a statement back in March.“This new option gives delinquent borrowers another path to avoid foreclosure. We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings.”
Borrowers will only have to make their new, lowered payments on time for three months before the modifications become permanent. After having more limited success in the past than the Administration had hoped for, it now seems the FHFA is trying to remove every barrier for these borrowers to take advantage of the government’s help. The Agency has not said how many troubled homeowners it hopes to help with this streamlined initiative, but to date it purports to have saved 2.7 million Americans stave off foreclosure.