Check your Twitter, check your LinkedIn because the Federal Housing Finance Agency is launching a social media campaign to raise awareness for principal reduction modification being offered by the GSEs to certain borrowers who are still struggling in the aftermath of the financial crisis.
The agency is targeting at-risk homeowners saying “If you are eligible, a principal reduction modification could help you avoid foreclosure and stay in your home by reducing your monthly payment amount and the amount you owe on your mortgage.”
Borrowers may be eligible if their loans are owned or guaranteed by Fannie Mae or Freddie Mac, they were 90 days or more delinquent on their mortgage payments and have an outstanding unpaid principal balance of $250,000 or less as of March 1, 2016, they owe more than 115 percent of what their house is worth, and of course own and live in their home.
FHFA undertook an extensive evaluation in order to determine whether there was a need to implement a Principal Reduction Modification program for seriously delinquent, underwater borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac. The agency’s objective was to develop a program that helped targeted borrowers avoid foreclosure while also adhering to FHFA’s mandate to preserve and conserve the assets of the GSEs. After this evaluation, the one-time Principal Reduction Modification program was announced on April 14, 2016 specifically for the eligible population expected to be approximately 33,000 borrowers.
This program’s goal was to give seriously delinquent, underwater borrowers a last opportunity to avoid foreclosure while also addressing negative equity remaining from the financial crisis. FHFA has determined that loan servicers must solicit all borrowers eligible for the Principal Reduction Modification starting no later than October 15, 2016.
With this social media campaign, FHFA hopes to make these borrowers aware of not just the program itself but the letters from servicers that will be sent to them. Along with promoting helpful information about the program, the agency also gives borrowers examples of these letters to insure the letters they receive will be opened and responded to quickly. To accept, borrowers have to make three on-time payments and sign the acceptance letter. The last day servicers can offer eligible borrowers this Principal Reduction Modification is December 31, 2016.