After four months of leaving the benchmark interest rate for standard mortgage modifications at an 18-month high, Fannie Mae and Freddie Mac recently announced that they are cutting the benchmark rate.
Back in January, Fannie and Freddie increased the standard mortgage modification benchmark rate from 3.875% to 4.25%. That level is the highest the benchmark rate has been since July 2015.
That increase also marked the first time that the benchmark rate rose above 4% since December 2015.
Now, Fannie and Freddie are cutting the benchmark rate slightly, but leaving it above 4%. The government-sponsored enterprises announced last week that they are cutting the benchmark rate to 4.125%.
The January hike marked the second straight month of an increase, after Fannie and Freddie dropped the benchmark rate throughout 2016, progressively decreasing it below 4%.
The increases also came after the GSEs dropped the standard mortgage modification benchmark interest rate to the lowest level ever, 3.5%, in August 2016.
Then, the GSEs increased the benchmark rate from 3.5% to 3.875% in December, before hiking it well above 4% in January.
And now, they’re cutting it back a bit.
The benchmark rate tracks with prevailing market rates, and the most recent data from Freddie Mac shows that interest rates have generally been the decline (with some slight modulation) over the last several months.
The standard modification program is “designed to help those borrowers who are ineligible for the Home Affordable Modification Program.”
According to the GSEs, 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.
The new 4.125% interest rate took effect on May 12, 2017.