Streamlined Loan Modification Program (SMP)

From HOUSINGWIRE.com - "Streamlined Loan Modification Program Rolls Out":

The streamlined modification program (SMP) announced Nov. 11 has now rolled out and will allow government-sponsored entities Freddie Mac (FRE: 0.69 -2.82%) and Fannie Mae (FNM: 0.69 0.00%) to modify large numbers of delinquent mortgage loans in an effort to prevent foreclosures, the GSEs - along with the Federal Housing Finance Agency - announced Thursday.

The SMP officially went into effect Monday and will replace several time-consuming steps in the traditional modification process with faster procedures and standard eligibility requirements, Freddie said in a press statement. The program will allow mortgage and escrow payments to be cut to 38 percent or less of an eligible borrower’s gross monthly income by either reducing mortgage rates, extending the mortgage term up to 40 years, or forbearing on a part of the principal amount until the loan matures or is paid off, at which time the borrower will be required to make a balloon payment.

Looks like a few people are being helped:

Fannie Mae said in a separate statement that it has been working with FHFA and 27 lenders and servicers in the HOPE NOW alliance to implement the SMP. "Along with other recently announced initiatives by Fannie Mae to reach and help financially troubled borrowers earlier, including our Early Workout program, the SMP is a critical component of our company's foreclosure prevention efforts," president and CEO Herb Allison said. "These efforts are helping more than 10,000 delinquent borrowers every month get back on track."

It continues to appear that many banks feel that loan modifications are the path to housing salvation and subdivisions without foreclosures. Rate reductions, principle reductions, and neither rolled onto the back-end. Perhaps, with these types of provisions, a significant dent could be made as these loans would become affordable again to a much larger group of distressed homeowners. Until then, current efforts are better than nothing but still a very sloooow uphill battle.