Mortgage

Fannie Mae, Freddie Mac drop mortgage modification interest rate to lowest level ever

First time the modification interest rate will be below 4%

For the first time since Fannie Mae and Freddie Mac first established a benchmark interest rate for the standard mortgage modification programs in Jan. 2012, the rate is about to be lower than 4%.

Beginning Nov. 13, Fannie Mae will lower its standard modification interest rate from 4% to 3.875%. Freddie Mac lowered its standard modification interest rate by the same margin, with its change taking effect Nov. 5.

The new standard modification interest rate of 3.875% is the lowest the rate has ever been.

Fannie and Freddie lowered the standard modifications from 4.25% to 4% last month, which tied the previous all-time low.

Prior to that, the standard modification rate had only touched 4% three other times since the modification interest rate was first set.

The only other times the standard modification interest rate has been 4% were in February and May of this year, as well as December 2012.

In July, Fannie and Freddie raised the required interest rate for standard modifications from 4.125% to 4.25%. The standard modification rate hadn’t been that high since Nov. 2014.

In June, Fannie and Freddie increased its standard modification rate from 4% back to 4.125%, which was the designated rate from April 14 through May 14.

And in May, Fannie and Freddie dropped the interest rate from 4.125% to 4%.

Fannie announced the change Friday in an email sent to its servicers, while Freddie’s change was posted on its website.

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.”

Therefore, 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 Nov. 13, while Freddie said that servicers must use the new interest rate for any mortgage loan modification evaluation conducted on or after Nov. 5.

When the program began in Jan. 2012, Fannie’s benchmark interest rate was 4.625%. 

About the Author

Most Popular Articles

Freddie Mac: Mortgage rates reverse course from last week’s low

This week, the average U.S. fixed rate for a 30-year mortgage jumped to 3.69%. That’s still more than a percentage point lower than the 4.85% of the year-earlier week.

Oct 17, 2019 By

Latest Articles

Report: Over half of homes on the market will sell below original price

Is there a Black Friday looming for home sales too? Home trade-in company Knock forecasted that by the end of September 2019, 67% of listings on the market were expected to sell below their original list prices.

Oct 22, 2019 By