(Update 1 reflects clarified language regarding the modification options.) The streamlined modification program (SMP) announced Nov. 11 has now rolled out and will allow government-sponsored entities Freddie Mac (FRE) and Fannie Mae (FNM) to modify large numbers of delinquent mortgage loans in an effort to prevent foreclosures, the GSEs -- along with the Federal Housing Finance Agency -- announced Thursday. The SMP officially went into effect Monday and will replace several time-consuming steps in the traditional modification process with faster procedures and standard eligibility requirements, Freddie said in a press statement. The program will allow mortgage and escrow payments to be cut to 38 percent or less of an eligible borrower's gross monthly income by either reducing mortgage rates, extending the mortgage term up to 40 years, or forbearing on a part of the principal amount until the loan matures or is paid off, at which time the borrower will be required to make a balloon payment. “This initiative builds on Freddie Mac's current loss mitigation efforts, which are on track to provide three out of five of our seriously delinquent borrowers with a workout this year,” said Freddie's CEO David Moffett. “Our alliance with FHFA, Fannie Mae, and the HOPE Now Alliance will help our industry bring relief to thousands of distressed homeowners.” Fannie Mae said in a separate statement that it has been working with FHFA and 27 lenders and servicers in the HOPE NOW alliance to implement the SMP. "Along with other recently announced initiatives by Fannie Mae to reach and help financially troubled borrowers earlier, including our Early Workout program, the SMP is a critical component of our company's foreclosure prevention efforts, president and CEO Herb Allison said. "These efforts are helping more than 10,000 delinquent borrowers every month get back on track." Both GSEs instructed troubled borrowers to first determine their eligibility by contacting their servicers, who will already be "identifying eligible borrowers and reaching out to them through the mail." To be eligible, borrowers must own and occupy the property as a primary residence, be delinquent at least three mortgage payments and not have filed for bankruptcy. “Foreclosure prevention is critical for individuals and families, their communities and the overall housing market,” said FHFA director James Lockhart. “I am pleased that our program is being rolled out right on schedule and that servicers are already working at modifying delinquent loans with the goal of keeping people in their homes.” Visit www.freddiemac.com, www.fanniemae.com and www.fhfa.gov for further details. Write to Diana Golobay at diana.golobay@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.