[1]Fannie Mae [2] announced earlier this week it will be adjusting the required interest rate [3] for its Standard Modification Program.
The new interest rate of 4.5 percent will be effective for all Fannie Mae mortgage loans approved for the Standard Modification Program on or after October 14, 2014.
This will be the sixth adjustment [4] to the interest rate of the Standard Modification Program since Fannie Mae launched the program in January 2012 as a way to help borrowers who are not eligible for the Home Affordable Modification Program (HAMP [5]) avoid foreclosure.
"The Fannie Mae Standard Modification interest rate is not determined on a preset schedule," Fannie Mae said in the announcement. "The interest rate is subject to periodic adjustments based on an evaluation of prevailing market conditions."
The interest rate was just lowered from 4.5 percent down to 4.375 percent on September 15. When the program began in January 2012, the rate was 4.625 percent, but by December of that year, it had been adjusted to 4 percent even. On September 1, 2013, the rate was raised back up to 4.625 percent, then adjusted slightly down to 4.5 percent in July 2014.
Fannie Mae noted in their announcement of the interest rate increase that "loan modification requests previously approved at the prior modification rate are not eligible to be resubmitted for approval under the new modification rate."