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Bob Khalsa: Feds ease loan modification rules

Posted: April 12, 2013 2:00 a.m.
Updated: April 12, 2013 2:00 a.m.

Bob Khalsa

 

Some homeowners who are still struggling to avoid foreclosure may soon benefit from streamlined rules that offer an easy way to lower monthly payments and modify their mortgage without requiring financial or hardship documentation.

The revised rules were announced recently by the Federal Housing Finance Agency.

As a result, Fannie Mae and Freddie Mac will offer the new, Streamlined Modification Initiative that the FHFA hopes will minimize losses and help struggling borrowers avoid foreclosure and stay in their homes.

Beginning July 1, servicers will be required to offer eligible borrowers who are at least 90 days delinquent on their mortgage an easy way to lower their monthly payments.

The initiative eliminates the administrative barriers associated with document collection and evaluation. Eligible borrowers must demonstrate a willingness and ability to pay by making three on-time trial payments, after which the mortgage will be permanently modified.

Homeowners are encouraged to continue working with their servicer to evaluate all of their foreclosure prevention options.

“This new option gives delinquent borrowers another path to avoid foreclosure,” said FHFA Acting Director Edward J. DeMarco. “We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings.”

The program is available to homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac.

Bob Khalsa is President of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

 

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