Fannie Mae is set to raise the benchmark interest rate for its Standard Modification program for the second month in a row.
Beginning July 14, Fannie Mae will raise its required interest rate for standard modifications from 4.125% to 4.25%. The standard modification rate hasn’t been that high since Nov. 2014.
Last month, Fannie Mae increased its standard modification rate from 4% back to 4.125%, which was the designated rate from April 14 through May 14.
In May, Fannie dropped the interest rate from 4.125% to 4% but it’s now raising the rate for the second straight month.
Fannie Mae announced the change 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.” The new rate does not extend to HAMP borrowers.
In the note sent to servicers, Fannie said that servicers must use the new interest rate for any mortgage loan modification evaluation conducted on or after July 14.
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 2014.
The interest rate progressively dropped from October 2014 until February 2015, falling from 4.5% to 4%, before Fannie raised it in April, and now, citing “prevailing market rates,” Fannie is raising it again.