On March 27, Fannie and Freddie released SVC-2013-05, which streamlines the mortgage loan modification process. This new release eliminates any hardship requirements, but still fails to help the majority of underwater homeowners. Bankruptcy attorneys should pay special attention to these requirements, however, as many consumers are filing bankruptcy to get out from under their underwater homes.
Mortgage Modification Eligibility Requirements
- The mortgage loan must be at least 90 days delinquent, but no more than 720 days delinquent;
- The mortgage loan must have a pre-modified mark-to-market loan-to-value ratio (the gross unpaid principal balance of the mortgage loan divided by the current value of the property), greater than or equal to 80%; and
- The mortgage loan must be a first-lien mortgage loan.
There is no longer a hardship requirement. Nonetheless, many struggling borrowers will remain ineligible if they are significantly underwater (i.e. more than 80%). The full text of the release is available here: svc-2013-05.