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New Standard Modification Interest Rate Now Available

June 1, 2012

We are adjusting the Freddie Mac Standard Modification interest rate from 5 percent to 4.625 percent effective for new trial period plan evaluations conducted on or after July 1, 2012. Beginning today, you will find the new rate on the Standard Modification Interest Rate Web page. You are encouraged to begin using the new rate immediately.

Key Points:

  • You must use the fixed interest rate in effect on the date you evaluate the borrower to determine their eligibility and calculate the terms of a trial period plan payment. You must refer to the Standard Modification Interest Rate Web page for the interest rates and effective dates.
  • You must use the same fixed interest rate that was in effect on the date you determined the borrower to be eligible for the trial period plan when determining the final modification terms.
  • You are encouraged to bookmark the Standard Modification Interest Rate Web page for quick and easy access to ensure that you are using the correct interest rate in effect each time you evaluate borrowers for a Standard Modification.

Because the interest rate may adjust from time to time, you can now evaluate at-risk borrowers for a Standard Modification using a fixed interest rate that aligns more closely with current market conditions.

Workout Prospector

When evaluating a borrower for a Standard Modification in Workout Prospector®, it will prompt you to use the 4.625 percent interest rate if the date you indicate in the "Workout Decision Date" field is on or after June 1, 2012. However, you are not required to use this rate for new borrower evaluations conducted in June 2012.

If you are not operationally ready to support the new rate for trial period plan evaluations conducted in June 2012, you must complete the following steps to evaluate borrowers for a trial period plan and determine the permanent modification terms using the 5 percent interest rate:

  • Underwrite the borrower to determine their eligibility for a trial period plan. Please note: As you transmit the loan through Workout Prospector, you may receive fatal warnings because you are using the 5 percent interest rate and not the new interest rate. If the fatal warnings are due to the differences in the interest rate used and result in different modification terms displayed, please continue transmitting the loan in Workout Prospector with the interest rate that is displayed in Workout Prospector.
  • Prepare the final loan modification documents using the 5 percent interest rate you used when you determined the borrower's eligibility for a trial period plan.
  • Reflect the correct loan modification terms on Form 1128, Loss Mitigation Transmittal Worksheet, including use of the 5 percent interest rate, when you submit the loan for settlement.

Get More Information

  • Read Single-Family Seller/Servicer Guide Section B65.18, Determining the Terms of a Freddie Mac Standard Modification.
  • Visit the Standard Modification Interest Rate Web page.
  • Direct questions to your Freddie Mac representative.

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