The launch of a new loan modification program, the Streamline Modification Initiative was announced by the Federal Government on Wednesday.
The difference between the Streamline Modification Initiative that the Federal Housing Finance Agency has launched and the Home Affordable Modification Program is that those qualifying for the Streamline Initiative are not required to show proof of financial hardship to qualify.
The Streamline Modification Initiative will provide aid to homeowners holding loans backed by Fannie Mae and Freddie Mac that are “at least 90 days to 24 months delinquent on their loans. They also must have a first-lien mortgage that's at least 12 months old, and the amount they owe on their mortgages must be at least 80% of their home value” according to USA Today.
The new program will be in effect as of July 1, 2013 and will close August 1, 2015. Lenders will contact their borrowers that qualify by letter offering them the benefits of the Streamline Modification Initiative.
Borrowers that modify through the Streamline program are expected to reduce their payments by roughly 30% through lowering their interest rates, extending the terms of their loans, and only paying taxes on up to 30% of the unpaid balance of their home if that is the case.