Fannie Mae is set to raise the benchmark interest rate for its Standard Modification program. Beginning Oct. 14, Fannie Mae will raise its required interest rate for standard modifications from 4.375% to 4.5%.
The rate was lowered from 4.5% to 4.375% on Sept. 15, but will now rise again in one week.
Fannie Mae announced the change on Tuesday in an email sent to its servicers.
According to Fannie Mae’s website, the Standard Modification program is “designed to help those borrowers who are ineligible for the Home Affordable Modification Program.”
When the program began in Jan. 2012, Fannie’s benchmark interest rate was 4.625%. Fannie lowered the interest rate to 4.25% in Sept. 2012, before dropping it to 4% on Dec. 1, 2012.
The interest rate stayed at 4% until Sept. 2013, when Fannie raised it back to 4.625%, before dropping it back to 4.5% in July of this year.
“The Fannie Mae Standard Modification interest rate is not determined on a preset schedule,” Fannie said in the note to its servicers. “The interest rate is subject to periodic adjustments based on an evaluation of prevailing market conditions.”
Fannie also noted that any loan modification requests that were approved at the previous rate are not eligible to be resubmitted for approval under the new modification rule.