Homeowners with mortgages that are backed by Fannie Mae and Freddie Mac may soon be receiving help on their mortgage payments. For those borrowers who are 90 days behind, a new effort called the Streamlined Modification Initiative will help those homeowners lower their mortgage payments. The Streamlined Modification Initiative is one of the largest foreclosure prevention programs since HAMP was introduced in 2009.
Streamlined Modification Initiative to Lower Mortgage Payments
Recent estimates show that approximately 1.1 million American homeowners are behind on their mortgage payments by at least 3 cycles. While the Federal Housing Finance Agency won’t report how many homeowners will benefit from the Streamlined Modification Initiative, it’s expected that hundreds of thousands will be able to take advantage of this opportunity to prevent foreclosure.
The Federal Housing Finance Agency was able to previously help 2.7 million homeowners avoid foreclosure through HAMP. What makes the new initiative unique is that homeowners won’t be required to file any financial paperwork. Instead, homeowners must only stay current on their new mortgage payments for three months and upon doing so the modification will become permanent.
According to the Federal Housing Finance Agency, eliminating paperwork increases the effectiveness of fighting foreclosure and saves resources. To receive assistance with their mortgage, homeowners must have a loan that is at least a year old, but must not be over two years behind on their mortgage payments. Furthermore, the homeowner must have at least 80% or more of their principal balance remaining. Currently, the new program is only scheduled to help homeowners with their mortgage through December 2015.