Thousands of Borrowers to Get Mortgage Payments Reduced
By Les Christie
Starting this week, hundreds of thousands of struggling borrowers could be in for a pleasant surprise: a quick and easy way to get their mortgage payments back on track — and save considerable money.
Through a new effort called the Streamlined Modification Initiative, borrowers with mortgages backed by Fannie Mae and Freddie Mac who are at least 90 days behind on payments will start receiving offers from lenders to lower their mortgage payments.
The Federal Housing Finance Agency, which oversees Fannie and Freddie, won’t say how many delinquent homeowners will receive the modifications, but the Mortgage Bankers Association reported in May that about 1.1 million borrowers are behind on their loans by three payments or more. Not all of those mortgage holders have Fannie or Freddie loans, however.
The FHFA claims to have helped 2.7 million borrowers keep their homes through its other foreclosure prevention efforts, such as the Home Affordable Modification Program which was launched in March, 2009.
Unlike those previous efforts, however, the Streamlined Modification Initiative won’t require borrowers to file any financial paperwork. Instead, they just need to make the new payments for a trial period of three months and then the modification becomes permanent.
The FHFA said the extensive paperwork and procedures that other foreclosure prevention initiatives require has been a major obstacle in getting people the help they need. Paperwork gets lost, borrowers are asked to provide documents over and over again, and evaluating a borrower’s eligibility can be time consuming.
“This is a no-brainer and should have been done years ago,” said David Berenbaum, who coordinates fair housing and fair lending compliance initiatives for the National Community Reinvestment Coalition, a nonprofit focused on fighting foreclosures. Read more…