Freddie Mac Offers New Loan Modification Option

15 09 2011

Freddie Mac borrowers ineligible for participation in the Home Affordable Modification Program or previously in default on a HAMP or other loan workout will be able to take advantage of a new option that reduces mortgage principle and monthly payments by at least 10 percent each.

Under a Standard Modification, loans will have the interest rate set at 5 percent and the amortization period extended to 40 years from the time of the workout; lenders will receive cash incentives of up to $1,600 per home owner approved.

The Standard Modification replaces Freddie Mac’s Debt Coverage Ratio loan modification, which is now being referred to as a Classic Modification.

Source: “Freddie Offers New Loan Mod Option,” NASDAQ (09/13/11)

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