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A Mortgage Modification in Just 7 Days!

The Program

For the past several weeks the Minnesota Home Ownership Center has been piloting an innovative program with Fannie Mae that offers a new and more efficient way for Minnesota homeowners with Fannie Mae loans to access assistance.  This program, known as the Fannie Mae Partnership, builds on the strengths of the Homeownership Advisors Network (statewide counseling network) and maximizes the relationships Fannie Mae has with servicers.

Dedicated Fannie Mae staff that office at the Minnesota Home Ownership Center are able to greatly enhance and improve communications between counselors, servicers and investors and have been empowered to expedite the workout process.

The Process

The process starts with a homeowner contacting a nonprofit foreclosure counselor to discuss their situation and determine if they are a good candidate for a mortgage modification.  This foreclosure counselor is not employed by Fannie Mae or a loan servicer – their interests are solely as an advocate for the homeowner.

If the homeowner is a good candidate for a modification, the counselor works with the borrower to fill out all the required paperwork and collect the necessary documentation from the borrower.  That counselor then forwards the complete package to one of Fannie Mae’s in-house staff at the Minnesota Home Ownership Center for review.

If approved by the Fannie Mae representative, the modification is drafted and sent to the loan servicer for review and acceptance and then sent to the homeowner for their review and acceptance.

The Results

One story I heard from Ed Nelson, Marketing and Communications Manager at the MNHOC, was truly amazing: a borrower that had spent many months working through their servicer for a loan modification and was accepted on a trial modification was subsequently denied a permanent modification even though they had made all their payments on time.  Recently this borrower participated in an early pilot of this program and was able to get a permanent modification approved in just 7 days!

The Impact

To date, the mortgage modification programs have had lackluster results – far fewer mortgages have been modified than had been projected and the stories of borrower frustration and confusion over the process have been prevalent.  This new streamlined program ensures that for Fannie Mae loans, borrowers will have assistance in submitting a complete application to Fannie Mae and should have a response to their request in weeks versus months!

It is unclear how much mortgage modifications are helping to reduce foreclosures but I do believe it has helped keep foreclosures lower than they otherwise would be.  With this new program I’d expect far more approved modifications and thus more foreclosures prevented.  While this program most certainly will not end the foreclosure crisis, it can serve as an important lifeline for borrowers struggling to keep their homes and I think will have a measured impact on foreclosure activity in the future.

The Model for Other Mortgage Note Owners

This program is so simple and intelligent that I hope Freddie Mac and other large holders of mortgages will implement similar solutions – if we were to see this, we’d see even greater results in the future.  It just makes sense!

A similar program to this would also be perfect for homeowners that cannot afford to stay in their house and would rather try to work out a short sale with their lender versus letting the home go to foreclosure. Just like with mortgage modifications, not all borrowers are good candidates for short sales but a streamlined program such as this I believe could literally double or triple the number of successful short sales.

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TwinCitiesRealEstateBlog.com is not a Multiple Listing Service MLS, nor does it offer MLS access.
This website is a service of Aaron Dickinson of Edina Realty, a broker Participant of the Regional Multiple Listing Service of Minnesota, Inc.