Effective Dec. 14, standard modification interest rates will increase from 3.5% to 3.875%.
The standard mortgage modification benchmark interest rate before the announcement was 3.5% -- the lowest the rate has ever been, HousingWire reported.
This increase will mark the first time both government-sponsored enterprises upped their interest rates in 2016.
Since late last year, the GSEs have undergone several changes with its interest rates – in November 2015, both GSEs lowered their benchmark rates below 4%, dipping to 3.875%. The following month, though, saw a quick interest rate increase, with rates going back up to 4%.
In February 2016 it went back to 3.875%; 3.75% in March, 3.625% in May and 3.5% in August.
The modifications are “designed to help those borrowers who are ineligible for the Home Affordable Modification Program,” according to Fannie and Freddie.
The Freddie Mac website states that “servicers must use the standard modification interest rate in figuring out a standard modification trial period plan, streamlined modification, trial period plan or a capitalization and extension modification for disaster relief trial period plan.”
The new rate does not apply to HAMP borrowers, HousingWire reported.
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On Wednesday, Fannie Mae and Freddie Mac announced the increase of their benchmark interest rate for standard mortgage modifications to its highest level in 10 months, according to a