Fannie Mae to Retire Payment Reduction Plan at Year-End

""Fannie Mae's"":http://www.fanniemae.com Payment Reduction Plan (PRP) program will sunset on December 31, 2010.

The ""GSE's PRP program"":https://www.efanniemae.com/sf/servicing/prp/ was introduced in 2009 to provide a borrower with temporary payment relief while the servicer and borrower worked together to find a permanent foreclosure prevention solution.

[IMAGE] [COLUMN_BREAK]

Under the program, a homeowner’s mortgage payments can be reduced up to 30 percent of the contractual monthly payments of principal and interest. The program covers owner occupied properties, as well as investment properties and second homes.

According to a ""notice issued by Fannie"":https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/svc1016.pdf on Friday, all PRPs must be initiated by December 31st and must end within six months of commencement, or no later than July 1, 2011.

Servicers are instructed to continue to report PRP data on a monthly basis through the GSE's the HomeSavers Solution Network. Servicer incentives will continue to be paid on eligible PRPs upon the successful completion of a permanent foreclosure prevention alternative.

Fannie Mae stressed that even though the temporary payment relief program will be retired, servicers should continue to use all other foreclosure prevention options available to keep distressed homeowners in their homes.