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Principal Reduction Modification

Mortgage Modification Solution to Help Borrowers Avoid Foreclosure

With borrower solicitation deadlines fast approaching, we want to help you meet the Principal Reduction Modification requirements, which we announced in Single-Family Seller/Servicer Guide Bulletin 2016-07

We're doing more to bring awareness to borrowers who may be eligible for the Principal Reduction Modification. And we've created this temporary web page for our Servicers to help you with borrower inquiries. 

Important Update

September 21, 2016 – In Single-Family Seller/Servicer Guide (Guide) Bulletin 2016-18, we're announcing new Form 1205-PR, Post Settlement Correction Request for the Principal Reduction, to facilitate the processing of the Freddie Mac Principal Reduction Modification.

Effective October 1, Servicers must follow the new submission requirements for Form 1205-PR, which are included in this Guide Bulletin, along with Form 1205-PR as
Attachment A.

The Principal Reduction Modification

The Principal Reduction Modification is a temporary offering, designed to help seriously delinquent, underwater borrowers who are most at risk of foreclosure, mainly in neighborhoods that were hit the hardest by the housing crisis. This program allows eligible borrowers to obtain a loan modification that permanently forgives a portion of their mortgage debt. We developed this temporary offering with Fannie Mae and at the direction of the Federal Housing Finance Agency.

Outreach

  • Borrower Solicitations. Freddie Mac is conducting two types of borrower solicitation campaigns:
    1. Sending geographically-targeted solicitation letters to borrowers with Freddie Mac mortgages that are at least 90 days delinquent. These letters will be sent to borrowers in areas near the 2016 outreach events listed on the schedule chart below.
    2. Sending letters and making telephone calls to borrowers nationwide who may meet our other eligibility requirements (see below) for the Principal Reduction Modification. We sent the first notification on September 9, 2016, and are sending the second one at the end of September. The call campaign will be conducted throughout October and November.

    Remember that borrower solicitations must be sent no later than October 15, 2016 and all subsequent solicitation letters must be sent by December 31, 2016.

  • Fact Sheet. We're providing our new borrower-focused Principal Reduction Modification Fact Sheet at our in-person borrower events and online at the Freddie Mac Borrower Help Centers and Network.

  • In-Person Events. We're holding the following in-person events to help our customers and borrowers learn about the Principal Reduction Modification.

    2016 Outreach Event Schedule

    Date/ TimeBorrower Help CenterLocationDescriptionSolicitation Letter Mail Date/Quantity
    August
    Saturday, August 6
    9:00 a.m. – 2:00 p.m.
    D&E, a Financial Education and Training Institute, Inc. 9652 Fayetteville Rd, Jonesboro GA 30238
    Phone: 770-961-6900
    Congressman David Scott
    12th Annual Health Fair
    Mailed 7/13/16 to 1826 borrowers
    Wednesday, August 10
    10:00 a.m. – 7:00 p.m.
    West Angeles Community Development Corporation (CDC) 6028 Crenshaw Blvd., Los Angeles, CA 90043
    Phone: 323-751-3440
    Home Retention Clinic Mailed 7/11/16 to 3129 borrowers
    Wednesday, August 24 10:00 a.m. - 7:00 p.m. West Angeles CDC 6028 Crenshaw Blvd., Los Angeles, CA 90043
    Phone: 323-751-3440
    Servicer Event Mailed 7/11/16 to 3129 borrowers
    September
    Wednesday, September 7
    10:00 a.m. – 7:00 p.m.
    West Angeles CDC 6028 Crenshaw Blvd., Los Angeles, CA 90043
    Phone: 323-751-3440
    Home Retention Clinic Mailed 7/11/16 to 3129 borrowers
    Wednesday, September 21
    10:00 a.m. – 7:00 p.m.
    West Angeles CDC 6028 Crenshaw Blvd., Los Angeles, CA 90043
    Phone: 323-751-3440
    Home Retention Clinic Mailed 7/11/16 to 3129 borrowers
    October
    Saturday, October 15
    10:00 a.m. –  4:00 p.m.
    HomeFree USA 6200 Baltimore Avenue 3rd Floor, Riverdale, MD  20737
    Phone: 301-891-4600
    The More Help for Homeowners Mailed 7/11/16
    (tentative) to 1445 borrowers

Eligibility

Borrowers may be eligible* if:

  • Their mortgage is owned or guaranteed by Freddie Mac. Check Freddie Mac's Loan Look-Up Tool if you're unsure.
  • Their mortgage was at least 90 days delinquent as of March 1, 2016.
  • Their mortgage had an unpaid principal balance of $250,000 or less as of March 1, 2016.
  • The total the borrower owes on their mortgage is more than 115% of their home's current value.
  • The property is owner-occupied.

Borrowers who are currently performing under a loan modification Trial Period Plan with a first payment due date before May 1, 2016, are not eligible for the Principal Reduction Modification.

*Borrowers' eligibility for a Principal Reduction Modification is based on a number of factors, including, but not limited to, those described above.

Resources

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