GSE Notices on Streamlined Loan Mods In The Mail

Fannie Mae and Freddie Mac servicers will begin sending thousands of letters of delinquent borrowers this month offering them the chance to sign up for a streamlined loan modification that could reduce their mortgage payments to 38% of gross monthly income. The government sponsored enterprises issued servicer guidelines for the new streamlined modification program (SMP) on Dec.12 and they held a press conference in Washington to kick off the new foreclosure prevention program. "Along with other recently announced initiatives to reach and help financially troubled borrowers earlier, including our Early Workout program, the SMP is a critical component our company's foreclosure prevention efforts," Fannie president and chief executive Herb Allison said. The SMP is available to borrowers who have missed at least three payments on their existing mortgage and have no more than 10% equity in the property. The mortgage interest rate can be reduced to 3% for five years to make the modified loan affordable.