Streamline Modification Program

Written By: Joan Ewing, Op-Ed Writer

Everyone is getting back to their normal routine – it is important that we work together this year to help homeowners save their home, if possible.


Fannie Mae has announced a program, which I feel is exciting and hopefully will help borrowers save their home. First of all, I would like to disclose that some of the information obtained in this Blog was obtained in the News Release of December 18, 2008 and through the websites of and

Were you aware that Fannie Mae now has a Streamlined Modification Program (SMP) available to borrowers who are delinquent in their mortgage payments? The streamlined program was announced by the Federal Housing Finance Agency (FHFA) in November and is now available to Fannie Mae Servicers and borrowers as an option to help prevent foreclosures.

The SMO is designed to be a streamlined process for modifying the loans of a large number of borrowers who are delinquent in their mortgage payment and may be able to avoid foreclosure through the program.

Fannie Mae is now working with FHFA and 27 lenders and services in the HOPE NOW alliance to implement the Streamlined Modification Program. The guidelines for this program and the process seem rather simple.

The streamlined process allows a borrower to sign a single document at the outset of the workout process and this document establishes a new monthly payment during a three month trial period and sets forth the modification terms that will take effect if the borrower makes the new payments during the trial period. The program IS available to borrowers who HAVE MISSED AT LEAST THREE MONTH PAYMENTS on their existing mortgages.

Through the SMP, services may change the terms of a loan to reduce a borrower’s first lien monthly mortgage payment, including taxes, insurance and homeowners association to an amount equal to 38% of gross monthly income. The changes in terms may include one or more of the following:

Adding the accrued interest, escrow advances and costs to the principal balance of the loan, if allowed by state law; Extending the length of the mortgage; Reducing the mortgage loan interest rate in increments of .124 percent to an interest rate that is not less than 3%; Forbearing on a portion of the principal which will require the borrower to make a balloon payment when the loan matures or is refinance

Who is eligible for these loan modifications? All loans must be conforming conventional and jumbo conforming mortgage loans original on or before January 1, 2008. Borrowers who are least three or more payments past due and are NOT currently in bankruptcy. Only one-unit, owner-occupied, primary residences and current mark-to-market loan-to-value ration of 90% or more.

Servicers will be sending modification solicitation letters to thousands of borrowers believed to be eligible for this program. It is critical that eligible borrowers respond to these letters and reach out to their services to determine if they can receive SMP assistance. Also, if you know any borrowers who you feel may qualify, please encourage them to contact their servicer.

To date, I have not heard of anyone receiving a solicitation to save their home; however, since this program was just released on December 12, 2008, chances are we will be hearing more of this as the year continues.

Until next time – keep processing. More later.

About The Author

Joan Ewing - As an op-ed writer and active FHA DE Underwriter for the past 15 years, Joan Ewing is a proud NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). Joan brings years of FHA Government experience to her writings, letting her readers tap into her underwriting knowledge base.


Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.