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Monday, September 12, 2011

The new Standard Modification is effective for borrower evaluations beginning January 1, 2012

From Freddie Mac:

The new Standard Modification is effective for borrower evaluations beginning January 1, 2012, and will: 

» Replace our classic modification, which is a debt coverage ratio modification. 


» Expedite your evaluation of financially distressed borrowers for a modification by using Freddie Mac’s borrower contact and solicitation requirements for the SAI. 


» Simplify your underwriting by using a standard set of modification terms, including a 5 percent interest rate, for all eligible borrowers. 


» Include a trial period to help ensure borrowers can sustain their modified mortgage payments and reduce re-default rates in your Freddie Mac portfolio. 


» Incent you for successfully settling Standard Modifications in a timely manner based on the term of delinquency when the trial period starts. 


We strongly encourage you to begin evaluating borrowers for the Standard Modification as soon as you are operationally ready. Trial period plans may begin as early as October 1, 2011. Borrower evaluations occurring on or after January 1, 2012, must be for the Standard Modification. Additionally, please note that once you begin evaluating borrowers for the Standard Modification you may no longer evaluate borrowers for the classic modification. 

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