Fannie Mae and Freddie Mac - New Loan Modification Program

As reported by Bloomberg - "Fannie, Freddie Boost Effort to Minimize Foreclosures":

Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, will accelerate anti- foreclosure efforts with a new loan modification program designed to cut monthly payments for struggling homeowners.

Fannie and Freddie, operating under a government conservatorship, will target loans in which borrowers are at least 90 days delinquent and have high loan-to-income ratios, officials from the Treasury and the Federal Housing Finance Agency said today at a press conference in Washington. The companies may offer reduced interest rates and longer terms of as much as 40 years to trim monthly payments.

The loan modification plan:

Under the proposal, mortgage servicers will work with borrowers to reduce monthly payments to 38 percent of their gross income, a level considered a threshold for affordability, using a combination of lower principals, interest-rate reductions and extensions, the people said. The plan doesn't include money from the Treasury's $700 billion bank rescue.

Homeowners will have to apply for the program, and their loan modifications won't become final until they have made three consecutive payments. Their new monthly payment will include all of their monthly housing costs, such as taxes and even condominium payments, one person said.

With increasing regularity, these loan modification programs are becoming commonplace in the industry. In fact, Citigroup is joining the party as well. We've allowed our blog to be hijacked by the relentless news of late regarding the loan modification mania. If you find yourself similarly obsessed, you can find links to our previous loan modification articles below with most certainly more loan modification articles to follow. The housing market bust has created the loan modification boom.

1. Loan Modification Specialist - Don`t Miss Your Calling!
2. Loan Modification Programs - Officially in Vogue?
3. Loan Modification Programs - IndyMac and B of A Lead the Way
4. JPMorgan Chase Loan Modification - Mortgage Program Expanded
5. JPMorgan Chase Loan Modification - Moratorium on Foreclosures