How do I apply for a Freddie Mac Loan Modification Program?

If you are having trouble making your mortgage loan payments or are already late on your mortgage loan, you may want to consider when a loan modification is the best financial decision for you and your family.

If your home is to go into foreclosure, you can face bankruptcy, and have a serious scar on your FICO credit score for up to 7 years.

Freddie Mac Loan History

But help is available. Each year, Freddie Mac helps over 50,000 families avoid foreclosure. At the end of 2006, only 0.53 percent of Freddie Mac-owned single-family loans were 90-days or more delinquent or in foreclosure, down from 0.69 percent at the end of 2005.

Options Available To Avoid Foreclosure

For borrowers who face foreclosure, there are many workout options they can take advantage of, including loan modifications. Whether it’s reducing the borrower’s note rate or monthly payment, or extending the maturity date, a loan modification is a possible option for a borrower in default.

Applying For the Freddie Mac Loan Modification Program

If you are interested in participating in the free Government program, you can contact your current mortgage loan broker or lender. We have partnered with licensed brokers to help homeowners receive more information about the loan modification process.

Please use our contact form at the bottom of the page for more information. Once accepted, you will want to follow the steps below if doing a manual application, however, we suggest you use a broker to help you with the process.

How To Complete a FDIC Loan Modification

The following are the five basic steps you must follow to close a loan modification:

Step 1: Deliver two originals of the loan modification documents to the borrower. The borrower must sign, notarize, and return both original documents so you can submit one executed original copy for recordation (if applicable).

Step 2: Execute the loan modification within 25 days of receiving Freddie Mac approval.

Step 3: Submit for recordation if required, and file the loan modification within one business day of receiving the executed Loan Modification Agreement.

* Fax the completed Loss Mitigation Transmittal Worksheet with a copy of the executed Loan Modification Agreement to us at (703) 918-8018 (Attention: Settlement) within one business day of receiving the executed agreement. Do not send Settlement an originally executed Loan Modification Agreement. We require only a faxed copy of the executed agreement.
* Submit one original executed Loan Modification Agreement for recordation (if applicable).
* Send the other original executed Loan Modification Agreement to your document custodian.
* If required, obtain a title policy endorsement or similar title insurance product issued by a title insurance company, such as a mortgage loan Priority Guaranty (if available in the state where the property is located), to retain first-lien priority.
* Retain the original recorded (if applicable) Loan Modification Agreement in the mortgage loan file.

Step 4: Determine if the mortgage loan is in active or inactive status. After you make this determination, take the following actions during the accounting cycle in which the effective date of the modification occurs (after the Loan Modification Agreement has been executed and before the first modified payment is due):

* mortgage loans in Inactive Status
o Report the mortgage loan as a “reinstatement” in your monthly investor reporting loan-level transaction.
o Remit the reinstatement interest through Global Payments Inc. (GPI) on the applicable remittance due date for the mortgage loan.

Note: If the existing mortgage loan is an adjustable-rate mortgage loan, include any rate adjustments that occurred during the time the mortgage loan was in an inactive status in the reinstatement interest calculation.
* mortgage loans in Active Status
o Report the mortgage loan as a “non-exception” loan-level transaction in your monthly investor reporting transmission.
o Remit the monthly interest through GPI on the applicable remittance due date for the mortgage loan.

Step 5: Report and remit using the modified terms.

* Update your mortgage loan records to reflect the modified terms of the mortgage loan after you have completed the loan-level reporting and remitting for the accounting cycle during which the effective date of the loan modification occurs, but before you report and remit the first modified payment.
* Report the reinstatement via Electronic Default Reporting using default action code 20 within the first three business days of the month following the month you executed the loan modification, if applicable.
* Report the mortgage loan, using the modified terms in your monthly investor reporting loan-level transmission, for the accounting cycle in which the first modified payment due date occurred.