Fannie Mae, Freddie Mac roll mortgage modification interest rate back to 4%

November marks first month since Jan. 2012 that rate was below 4%

Last month, Fannie Mae and Freddie Mac dropped the benchmark interest rate for the standard mortgage modification programs below 4% for the first time since the programs began in Jan. 2012.

But that’s looking like a singular occurrence, as the government-sponsored enterprises announced Wednesday that they will both be increasing the standard mortgage modification interest rate back to 4%.

In November, Fannie and Freddie both lowered the standard mortgage modification interest rate to 3.875%. Prior to that, the standard mortgage modification interest rate had never been below 4%.

But beginning Dec. 14, the standard mortgage modification interest rate will return to 4%.

Fannie and Freddie lowered the standard modifications from 4.25% to 4% in October, 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 Wednesday 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.

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

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