Freddie Mac has finalized requirements on a new “Standard Modification,” a loan modification program for delinquent homeowners who did not meet requirements for the government’s Home Affordable Modification Program (HAMP).
Officially launching in January, the new program will begin a trial period on Oct. 1. It will be available to homeowners at least 60 days delinquent who have been evaluated by HAMP within the last 12 months. Also, the homeowner’s LTV ratio must be greater than 80 percent.
Servicers will receive compensation from Freddie Mac on an incentivizing basis: loans that are less than 120 days delinquent when modified will net servicers $1,600; loans between 120 and 210 days will yield $1,200; and for 210 or more days, Freddie Mac will pay out $400.
According to Freddie Mac, borrower’s interest and principal payments will drop at least 10 percent under the new program. Though HAMP has modified 791,000 loans and extended 1.6 million trials since March 2009, 763,000 trials were cancelled by servicers because of re-default, lacking documents, or ineligibility.