FHFA says its new Principal Reduction Modification program is a one-time offer to certain seriously delinquent, underwater borrowers who are still struggling.
WASHINGTON – April 19, 2016 – The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac would offer principal reduction to certain seriously delinquent, underwater borrowers who are still struggling in the aftermath of the financial crisis to help them avoid foreclosure and stay in their homes.
FHFA says its new Principal Reduction Modification program is a one-time offer.
- Loans must be owned or guaranteed by Fannie Mae or Freddie Mac
- Owner-occupant borrowers are those 90 days or more delinquent as of March 1, 2016
- Mortgages must have an outstanding unpaid principal balance of $250,000 or less
- Mark-to-market loan-to-value (MTMLTV) ratios must exceed 115 percent
- Other eligibility criteria also applies
FHFA thinks that about 33,000 borrowers will be eligible for a Principal Reduction Modification. Loan servicers must solicit borrowers eligible for a Principal Reduction Modification no later than Oct. 15, 2016.
FHFA additional information
- Fact Sheet: Principal Reduction Modification
- Frequently Asked Questions: Principal Reduction Modification
- FHFA's Analysis of a Principal Reduction Modification Program and Enhanced Non-Performing Loan Sales Requirements
- Fact Sheet: Enhanced Non-Performing Loan Sale Guidelines
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