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Interest Rate Change to Freddie Mac Standard Modification and Streamlined Modification

July 31, 2013

The Freddie Mac Standard Modification and Freddie Mac Streamlined Modification interest rate is increasing in response to current market conditions. Please remember to visit the Standard & Streamlined Modification Interest Rate Web page each time you evaluate a borrower to ensure you are using the interest rate in effect on the evaluation date.

New Interest Rate Now Available

We are adjusting the Standard and Streamlined Modification interest rate from 4 percent to 4.625 percent effective for new Trial Period Plan evaluations completed on or after September 1, 2013. Beginning today, you will find the new rate on the Standard & Streamlined Modification Interest Rate Web page.

Key Points

  • You should use the Standard and Streamlined Modification interest rate in effect and posted on the Standard & Streamlined Modification Interest Rate Web page as of the date you complete your evaluation and determine that the borrower is eligible for a Trial Period Plan.
  • The interest rate used for the final modification must be the same fixed rate used to evaluate the borrower’s eligibility for a Trial Period Plan.
  • In accordance with Single-Family Seller/Servicer Guide (Guide) Section B65.12.1(c), Freddie Mac Streamlined Modification, the terms for a Freddie Mac Streamlined Modification Trial Period Plan and modification agreement are determined according to the same steps as the Standard Modification, and are listed in Section B65.18(a), Determining the Terms of a Freddie Mac Standard Modification.
  • When evaluating a borrower for a Standard or Streamlined Modification in Workout Prospector®, you will be prompted to use the new rate after August 1, 2013. Servicers are not required to use this rate for new borrower evaluations conducted in August 2013, and are encouraged to use the 4 percent rate for evaluations conducted prior to September 1, 2013.

Workout Prospector

If you are not operationally ready to support the new rate for Trial Period Plan evaluations conducted in August 2013, you should complete the following steps to evaluate borrowers for a Trial Period Plan and determine the permanent modification terms using the 4 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 4 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 4 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 4 percent interest rate, when you submit the loan for settlement.

More Information

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