The Federal Housing Finance Agency (FHFA) announced today a new loan modification program that will help borrowers stay in their homes.
Under the new program, loan modifications will be available to as many as 30,000 qualified underwater borrowers facing financial hardship with loans now held by Fannie Mae or Freddie Mac. Eligibility also requires that the mortgages have an unpaid principal balance of not more than $250,000 and delinquency of 90 days or longer as of March 1 of this year. Homes must be owner-occupied. Additionally, FHFA will require third party buyers of Fannie and Freddie’s non-performing loans will be required to include principal reduction as part of their loan modification programs.
Mike Calhoun, President of the Center for Responsible Lending released the following statement.
Homeowners, communities and taxpayers will all benefit from FHFA's new program. Today’s actions will provide needed and effective relief to both families and communities.
Despite improvements in the overall housing market, there are still many homeowners who continue to face hardship in making their mortgage loan payments, and are deeply underwater on their home loans. These conditions are concentrated among homeowners with modest homes and located in low and moderate income neighborhoods. Families and communities of color are particularly facing these hardships.
The new program recognizes the value of principal reduction as an important tool that helps to keep families in their homes and reduces the cost of foreclosures. Up until now, this effective loan modification tool was not available to homeowners whose mortgages are owned by Fannie Mae and Freddie Mac. However, private lenders have long used principal reduction as one of the best tools to help homeowners remain in their homes and become current on their mortgages.
This program adds to ongoing modification programs, including the GSE streamline loan modifications and HARP (Home Affordable Refinance Program) interest rate reductions that have already provided relief to millions of GSE borrowers. FHFA has made a positive and progressive step forward for the housing market.
For more information, or to arrange an interview with a CRL expert, please contact Charlene Crowell at firstname.lastname@example.org or 919.313.8523.