FHFA Announces Principal Reduction Modification Program

Filed in Housing Finance by on April 18, 2016 0 Comments

moneyhousecsawThe Federal Housing Finance Agency (FHFA) has announced that Fannie Mae and Freddie Mac will offer a one-time principal reduction to certain seriously delinquent underwater borrowers to help them avoid foreclosures and stay in their homes. The program will allow eligible borrowers to obtain a loan modification that permanently forgives a portion of their mortgage debt.

The modification will be available to owner-occupant borrowers (primary residences or second homes) who are 90 days or more delinquent as of March 1, 2016 and owe $250,000 or less on their mortgage loans.

The amount owed on the mortgage, including any unpaid principal, interest, taxes, insurance or other arrearages, must be greater than or equal to 115% of the home’s value at the time the borrower is evaluated for the program. Eligible borrowers can have their principal balance reduced by 30% of the unpaid principal balance.

FHFA said in a press release that it expects about 33,000 borrowers will be eligible for the program. Servicers must solicit eligible borrowers no later than Oct. 5, 2016.

The agency also provided the following attachments:

Fact Sheet: Principal Reduction Modification

Frequently Asked Questions: Principal Reduction Modification

FHFA’s Analysis of a Principal Reduction Modification Program and Enhanced Non-Performing Loan Sales Requirements

For additional information, contact NAHB’s Becky Froass at 800-368-5242 x8529.

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