Freddie Mac has announced that help is available to struggling homeowners who received a loan modification through the government's Home Affordable Modification Program in 2009 and 2010 whose loans either have reset or are due to reset this year, according to Freddie Mac's blog.
With delinquencies and foreclosures declining steadily in the last two year or so, the GSEs have made a push recently to try and keep those numbers down by offering a variety of loss mitigation options to distressed borrowers. Last week, both GSEs announced they would be offering streamlined loan modifications to homeowners at risk of default or re-default.
Approximately 511,000 borrowers who received HAMP mods in 2010 are due to reset in 2015 and face the prospect of increased interest rates, commonly known as "step-ups."
"Under the terms of the HAMP program, the interest rate gradually resets, increasing by one percentage point annually until it reaches the market rate that was in effect at the time of the modification," Freddie Mac wrote in its blog. "For a $200,000 loan with a 40-year term, an interest rate increase from 2 percent to 3 percent would raise monthly mortgage payments by about $100."
Freddie Mac is encouraging borrowers who fall behind on their payments due to HAMP resets to check Freddie Mac's revised guidelines to see if their loan is eligible for re-modification. Freddie Mac is also encouraging distressed borrowers to reach out to their servicers and make them aware of their financial hardship. Also, the revised guidelines require servicers to evaluate Agency loans and actively reach out to at-risk borrowers.
"The payment on your HAMP modification will adjust after the first five years, so be prepared," Freddie Mac wrote on its blog. "Servicers are required to notify you of the rate increase four months before it becomes effective. This communication will also detail your payment change."
Fannie Mae and Freddie Mac have been actively involved in loss mitigation for distressed borrowers, having helped 3.4 million borrowers with foreclosure prevention actions since the two GSEs were taken under FHFA's conservatorship in September 2008, according to data released by the FHFA on Thursday evening. That includes 65,900 foreclosure prevention actions completed in the fourth quarter of 2014.