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FHFA Authorizes Principal Reduction for GSE Loans

Friday, April 15, 2016

An estimated 33,000 delinquent Fannie Mae and Freddie Mac (GSE) borrowers may be eligible for a new one-time principal reductionAn estimated 33,000 delinquent Fannie Mae and Freddie Mac (GSE) borrowers may be eligible for a new one-time principal reduction program that could help them avoid foreclosure of their homes.  The Federal Housing Finance Agency announced on Thursday it was offering the opportunity ending years of refusals to permit such modifications of GSE loans.

To be eligible for the new Principal Reduction Program borrowers must be both seriously delinquent and underwater on GSE mortgages, defined as 90 days or more past due as of March 1, 2016 and with mark-to-market loan-to-value ratios (MTMLTV) after of capitalization of arrearages of 115 percent or more.  Loans must have an unpaid principal balance of $250,000 or less and the property must be owner occupied.

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