On March 28, Freddie Mac announced in Bulletin 2014-4, that with regard to the processing of standard and streamlined modifications for mortgages with pre-modification mark-to-market loan-to-value ratios less than 80%, servicers must provide eligible borrowers the option to select a 480-month, 360-month, or 240-month term for the modification agreement. Servicers must include in the trial period plan notice each amortization term and its trial period payment only when the associated monthly principal and interest (P&I) payment reduction condition is met. For a 480-month amortization term, the estimated modified P&I payment must be less than or equal to the current contractual P&I payment. For a 360-month or 240-month amortization term, the estimated modified P&I payment must be at least 20% less than the current contractual P&I payment. Additionally, Freddie Mac eliminated the options for a borrower to request a term that is different than those provided in the trial period plan offer or to change the amortization term after the first trial period payment is made. The Bulletin also advises servicers that, effective July 8, 2014, Freddie Mac will evaluate market rates on a monthly basis to determine whether a change to the standard modification interest rate is necessary, and, if so, will post the new rate and its mandatory effective date on the Standard Modification Interest Rate web page by the fifth business day of each month.
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