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The following is an editorial on updated information about the Fannie Mae and Freddie Mac loan modification program. I did some additional research on this and put together this article. Do you need a breaking news article or other content written? I can help you. All I need is a list of keywords you want to have in the content and a synopsis of what you want the page to be about. Contact me today.


Updates on the Fannie Mae and Freddie Mac Streamlined Modification Program

Fannie Mae and Freddie Mac, in conjunction with U.S. government officials, are speeding up the modification of home loans held by financial companies. This came on the news that Citi Group was imposing a moratorium on most "new" foreclosures in an effort to help people stay in their homes. The Treasury Department will make the announcement at a 2:00 p.m. press conference at the Federal Housing Finance Agency.

The program will be an extension of Hope Now alliance, which was announced last year and is designed to prevent foreclosures by reworking mortgage loan terms to help make mortgage payments more affordable for homeowners. U.S. government officials also plan to encourage large banks that hold loans to take similar steps.

The streamlined loan modification program is directed at some of the 31 million mortgages, 58% of the nation's total that are owned or guaranteed by Freddie or Fannie. Loans must be 90 days or more past due, and homeowners must owe at least 90% or more of what the house is currently worth to qualify.

The plan focuses on the borrower's income and how much he or she can afford to pay and cuts down on the time the loan modification process takes. According to industry experts, major lenders, including Bank of America, Wells Fargo and Citigroup, have agreed to apply the formula to loans they administer for Fannie Mae and Freddie Mac and are expected to their own loans.

"This is a big step forward that will make it easier to modify loans for the most at-risk homeonwers so they will be able to avoid foreclosure and stay in their homes," said Faith Schwartz, head of Hope Now, an alliance of lenders that have spearheaded the industry's foreclosure response.

Typically, loan modifications are very time-consuming and involve a lot of documentation to show why borrower is behind on his or her loan and proof that the borrower can pay the new mortgage offered under the loan modification. Common documentation required includes two years of tax returns, two to six months worth of bank statements, 2 years of W-2s, pay stubs for the last 4 months, a list of assets and liabilities and a household budget showing the amount of money the borrower CAN afford to pay on a monthly basis. Currently, a loan modification can take weeks and even months to complete, depending on the circumstances.

Under the Fannie Mae and Freddie Mac plan, borrowers will have to provide a statement or affidavit showing that they have encountered some sort of hardship, such as losing a job, that has impacted their ability to pay their mortgage. It will only apply to loans made on or before Jan. 1, 2008, and borrowers will be disqualified if they file for bankruptcy. The homes must be owner-occupied and escrows for real estate taxes and insurance must already be set up.

Servicers are expected to be paid $800 for a successful modification and loan investors are expected to reimburse servicers for certain fees associated with the modification. There will be a 90-day trial period, and if borrowers successfully make payments for those 90 days the modification will be formally approved.

Federal National Mortgage Association, better known as Fannie Mae, and the Federal Home Mortgage Corporation, known as Freddie Mac, have been privately owned and operated since 1968 as government sponsored enterprises (GSEs). Both Fannie Mae and Freddie Mac have purchased mortgages from banks, savings and loans and other lenders to generate cash for the mortgage brokers and encourage more home loans.

Foreclosure filings rose 71% in the third quarter from a year earlier according to RealtyTrac. Home prices continue to fall in many areas, and stricter mortgage standards make it harder for homeowners to sell or refinance. About 4 million borrowers are at least one payment behind, according to the Mortgage Bankers Association.

If you are in danger of being late on your mortgage, contact your lender now. You may qualify for a loan modification under newly implemented programs, which could prevent foreclosure and allow you to stay in your home. Even if you've been previously turned down, call your lender anyway. Persistence may pay off for you. More and more lenders are following the Federal Deposit Insurance Corporation (FDIC) example and offering loan modification programs in their efforts to staunch the flow of foreclosures, which continue to rise at epidemic levels.

Maria Ny is a published author. She writes articles and website content on a variety of subjects including various types of mortgages, information on various law practice areas, FICO credit scores, search engine optimization and internet marketing, animals and instructional content. Visit www.marianydesigns.com to read more informative articles and to find out how she can help you with your web content needs.