Starting this week, hundreds of thousands of struggling borrowers could be in for a pleasant surprise: a quick and easy way to get their mortgage payments back on track -- and save considerable money.
Through a new effort called the Streamlined Modification Initiative (SMI), borrowers with mortgages backed by Fannie Mae and Freddie Mac who are at least 90 days behind on payments will start receiving offers from lenders to lower their mortgage payments.
Isn’t this too little, too late?
Maybe! but...
The Federal Housing Finance Agency (FHFA), which oversees Fannie and Freddie, won't say how many delinquent homeowners will receive the modifications, but the Mortgage Bankers Association reported in May that about 1.1 million borrowers are behind on their loans by three payments or more.
During the “boom years” California, Southern California in particular lead the nation by a wide margin in Fannie and Freddie loans, so it stands to reason many of these struggling homeowners are in our neighborhoods.
Another loan mod program?
Yep, with one major difference!...
Unlike those previous efforts, however, SMI won't require Temecula homeowners to file any financial paperwork. Instead, they just need to make the new payments for a trial period of three months and then the modification becomes permanent.
"This is a no-brainer and should have been done years ago," said David Berenbaum, who coordinates fair housing and fair lending compliance initiatives for the National Community Reinvestment Coalition, a non-profit focused on fighting foreclosures.
Payments will be reduced by extending the term (usually from a 30 year to a 40 year) and lowering the interest rate.
This is the opportunity that distressed Temecula homeowners have been waiting for. Because they were behind on their payments they weren’t eligible for HARP or HARP 2.0 and interest rates are still low enough to provide significant payment relief.
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