Special offer

Save that house! Streamlined Modification Program...coming soon

Real Estate Agent with Search Homes for Sale in Maryland at HelpShop.com


There is a new program that will soon be available for delinquent mortgage holders. The program is called Streamlined Modification Program, it is an attempt to help as many as possible to keep their home from foreclosure.  The program will be available to loans owned by Fannie Mae, Freddie Mac, Hope Now and it’s 27 service partners.

The mortgage servicer will work with the homeowner to adjust the monthly payment to be 38% of income.  The monthly payment would be principal + interest  + taxes + (homeowners  insurance, mortgage insurance, homeowner dues, condo dues).

There are several ways that they can make the adjustment:

  1. One way is to extend the term, up to 40 years
  2. Another way is to reduce the interest rate.  They can reduce it as low as 3%.  This reduction will last for five years and then the interest rate will adjust up by 1 % per year until it maxes at the current market rate or the original interest rate whichever is lower.
  3. They can even reduce the principal balance to the current market value for the house.  This would only be available if the principal loan balance exceeds the current market value.  The reduction of the principal balance is not completely forgiven, it will become a balloon payment that will be due at the end of the loan term. And if the owner sells prior to the end of the loan term, it would be due at settlement to satisfy the loan.

Any or all of the methods can be used to get the monthly payment down to the 38% of income.

Criteria to qualify:

  • The loan must be at least 90 days delinquent and
  • The amount owed must be at least 90% of the homes value.

The program should start on December 15th, so banks might not know a lot about it, but hopefully they will be up to speed soon. 

The mortgage holder must call their servicer and ask about it.

The servicer will ask for

  1. Proof of income, and
  2. A statement of hardship. Mortgage holder should be willing and able to explain the circumstances that lead to falling behind, (for example such as job loss/change)

Here are some links that go into detail about the program:

Washington Post article

CNN Money article

The FHFA's (Federal Housing Finance Agency) press release about the program and FAQ:

Spread the word and help folks save their houses.  Think Stability.



(410) 852-9524

Listings Search at www.HelpShop.com

Russel Ray, San Diego Business & Marketing Consultant & Photographer
Russel Ray - San Diego State University, CA

Criteria to qualify:

  • The loan must be at least 90 days delinquent and
  • The amount owed must be at least 90% of the homes value.

That doesn't sound right. Except in the rarest of circumstances, a loan that is only 90 days delinquent probably would not come close to being 90% of the home's value.

Let's take San Diego as an example. A mortgage with which I am intimately familiar is $1,760 on a home currently valued at $480,000. If the owner is three months late, that's only $5,280, nowhere near being $432,000, which is 90% of the home's value.

Nov 27, 2008 11:37 PM
Maggie Baumbach
Search Homes for Sale in Maryland at HelpShop.com - Reisterstown, MD

Hi Russel, Let me clarify - the principal balance of the loan must be at least 90%.  So someone who has paid their mortgage down for 12 years and now only owes 250k in your scenario would not be eligible for the streamlined modification. The possible exception that I understood was if the market value of the home had fallen so much that the principal balance was now 90% of the market value.  The links also provide some good information about the program.

Hope that helps,


Nov 28, 2008 05:25 AM
Margaret Oscilia
Creative Concepts-Home Staging and Contracting, Salem Oregon - Salem, OR
Home Stager, Salem Oregon

Maggie -- What a great and informative blog!  I hadn't heard of this program and appreciate the links so I can read more about it.  Thanks for sharing!  (You may wish to post this to some groups so it gets more exposure!)

Dec 02, 2008 03:38 AM
AMBER NOBLE GARLAND - Top Real Estate Expert, Property Tax Appeal Specialist & Author
Strategic Marketing Expert & Relocation Specialist Serving New Jersey and nationwide! - Marlboro, NJ
- The Agent You Can Trust To Deliver REAL Results!

Thank you for this valuable info Maggie, and for commenting on my blog.

Dec 03, 2008 03:44 AM
c m
Colorado Springs, CO

I agree with Margaret, get this info to some groups!  Good stuff for those of us who have contact with sellers, beyond the Realtor relationship.  I know there are folks out there that would appreciate knowing about the program!

Dec 05, 2008 09:31 AM
Sandy Shores FL RealtorĀ®, Melbourne Real Estate
M & M Realty of Brevard Inc. - Melbourne, FL
Brevard County Real Estate, Florida's Space Coast

Hi Maggie, Great new programs coming available to help homeowners in difficult situations.  My concern is that there doesn't seem to be much available for owners that are not yet delinquent and some that don' t have any equity in their homes.  I know they are doing what they can...hopefully some of those will be coming down the pike.  Thanks for the post! Keep the info coming!  Have a great day!

Dec 08, 2008 03:21 AM
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Hi Maggie, This is great info.  Thanks for sharing, and thanks for clarifying after Russel's comment.  That makes sense.  It seems that the people who will be helped most are those who bought at the height of the boom and got the most dangerous kind of financing (buying with little down and little or no equity position now). I'll be sure to pass this info along.

Dec 08, 2008 04:25 PM