http://www.debts.org/index.php en info@debts.org Copyright 2008 2008-12-01T15:28:00+00:00 http://www.debts.org/11/index/foreclosure_rescue_plan_streamline_modification_program/ http://www.debts.org/11/index/foreclosure_rescue_plan_streamline_modification_program/#When:13:51:00Z Fannie Mae and Freddie Mac have followed other major banks, such as JP Morgan and Citigroup by implementing mortgage modifications in a bid to prevent the market being flooded by foreclosures.In the fall of 2008, the Bush Administration bought out Fannie Mae and Freddie Mac who own 31 million mortgages to the tune of $5 trillion. The US government was forced to takeover portfolios form the two mortgage giants when they could no longer survive within a collapsing market. More.... What is the Streamline Modification Program?In November 08, President Bush announced a new initiative to modify mortgages with the objective of restoring health to the housing market. Step forward Fannie Mae and Freddie Mac. At the behest of the Government the two biggest mortgage providers are extending an olive branch to homeowners on the brink of foreclosing or who have already begun foreclosing procedures.If eligible, homeowners will have repayments lowered to no more than 38% of the household monthly income and some mortgage schedules could also be extended up to 40 years. Additionally, interest on mortgages can be lowered for five years before rising to a predetermined level.Who is eligible for the Streamline Modification Program?Eligibility for the program set to launch December 15th 2008, is dependant on the following factors: Mortgage payments must be a minimum of 90 days overdue Homeowners must owe at least 90% of their home’s current value Homeowners must live in the home purchased using the mortgage The homeowners must not have filed for bankruptcyNB: The home loans must be paid in full even if home is in negative equity.Industry officials who welcomed the move hope that every mortgage lender will implement mortgage modification on this scale. However, some have argued that negative equity may dissuade homeowners from participating in the program. “When they [homeowners] realize they owe $300,000 on a home worth $200,000, many will decide it’s just not worth it,” said Dean Baker, co-director of the Center for Economic and Policy Research.Fannie reported in November 08 that 1.7% of its mortgages are in a default condition by 90 or more days. With 18 million mortgages on Fannie Mae’s porfolio that percentage equates to roughly 300,000 mortgages that could benefit from the new program.At time of writing, Freddie Mac had yet to release third-quarter results, but at the end of the second quarter it had 115,000 mortgages in a default status, which equates to about 1% of its total portfolio. That number is likely to be significantly higher when the results for the third quarter come in.How does the Streamline Modification Program affect foreclosures?Mortgage providers operating within the Freddie Mac and Fanny Mae network have been instructed to stop any foreclosure proceedings between November 26th 2008 and January 9th 2009, in order to give the rescue bid a chance to work.“By delaying these foreclosure sales, the nation’s servicers will have the opportunity to work with more borrowers who could qualify for a modification under the new [program],” said Freddie Mac CEO David M. Moffett in a statement.Freddie has instructed its mortgage providers to contact the 6,000 borrowers whom have auction sales or evictions arranged over the period November 26th and January 9th.  All 6,000 homeowners will be informed that the sale of their property has been postponed. Fannie has estimated that 10,000 of its borrowers will be given a 11th hour reprieve. Both mortgage giants claim that very few of the homeowners facing foreclosure within this timeframe are Freddie or Fannie homeloans. Return to Debts homepage, click here Foreclosure Rescue Plan: Streamline Modification Program 2008-11-25T13:51:00+00:00