Freddie Mac offers new ‘loan mod’ option

Borrowers whose loans were purchased by Freddie Mac yet deemed ineligible for participation in the Home Affordable Modification Program or previously in default on a HAMP (or other loan workout), will be able to take advantage of a new option that reduces mortgage principle and monthly payments by at least 10 percent each.

Under a Standard Modification, loans will have the interest rate set at 5 percent and the amortization period extended to 40 years from the time of the workout. Lenders receive cash incentives of up to $1,600 per home owner approved.

The Standard Modification replaces Freddie Mac’s Debt Coverage Ratio loan modification, which is now being referred to as a Classic Modification.