A new anti-foreclosure program beginning July 1 will make it easier for people behind on payments to get a loan modification.
Got a home loan through Fannie Mae or Freddie Mac? Behind on payments? The U.S. government has a deal for you.
Sounds like a TV scam, but this summer the Federal Housing Finance Agency really will relax mortgage mod requirements for delinquent homeowners. Owners 90 days or more behind won’t have to prove hardship to be eligible for a loan modification anymore.
While the paperwork to prove hardship will longer be necessary however, it could still help. FHFA acting director Edward DeMarco said in a statement, “We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings.”
Options include lower interest rates, longer repayment terms, or principal forbearance (which postpones, but does not forgive, part of the balance). Homeowners still have to make three payments in a row after qualifying to join the program.
While Fannie and Freddie finance about two-thirds of the country’s mortgages, only about 3 percent of those might be delinquent enough to participate in this program, Reuters says. But the goal is to keep borrowers in their homes and minimize losses to the firms, which are government-backed. The program will be open for two years starting this July.