Fannie Mae Introduces Streamlined Modification Program (SMP)

December 16, 2008

Streamlined Modification Program (SMP) Introduced

Today we issued Announcement 08-33: Introduction of the Streamlined Modification Program, which introduces the Streamlined Modification Program (SMP) that originally was announced last month in a statement from Federal Housing Finance Agency (FHFA) Director James B. Lockhart. 

Program summary
The SMP has been developed in collaboration with FHFA, the Department of Treasury, Freddie Mac, and members of the HOPE NOW Alliance. Under the program, which begins on Monday, December 15, 2008, servicers will use a streamlined loan modification process to help eligible borrowers better afford their monthly mortgage payments.  The SMP applies to borrowers who have missed at least three monthly payments on their existing mortgages.

    SMP eligibility criteria include:
  • Conforming conventional or jumbo conforming mortgage loans originated on or before January 1, 2008;
  • At least three payments past due;
  • Limited to one-unit properties that are the borrower's primary residence;
  • Current mark-to-market LTV of 90 percent or more; and
  • Property cannot be abandoned, vacant, condemned or in a serious state of disrepair.

Servicers may modify eligible borrowers’ mortgage loans in order to reduce their monthly mortgage payments to an amount equal to 38 percent of their monthly gross income with actions in the following order:

  • Capitalize accrued interest, escrow advances and costs, if allowed by state law; 
  • Extend the term of the mortgage loan by up to 480 months;
  • Reduce the mortgage loan interest rate in increments of .125% to a fixed rate that is not less than 3% (if this exercise results in a below market rate, it will, after 5 years, step up in annual increments to a market rate); and,
  • As a last resort, provide for principal forbearance, which will result in a balloon payment fully due and payable upon borrower’s sale of the property or payoff or maturity of the loan.  

Borrowers meeting the SMP eligibility requirements enter into a trial period in which they must make monthly loan payments equal to the proposed modified payment. Timely payments must be made for three consecutive months before a borrower’s loan can be modified under the SMP.

Servicer tools
Servicers should proactively solicit borrower participation in the SMP using specially developed Fannie Mae solicitation materials, which are available on the Streamlined Modification Program page on In addition, an encrypted Excel spreadsheet will be available through the Home Saver Solutions® Network (HSSN) to help servicers calculate borrowers’ projected monthly loan payments under the SMP.

We expect to provide additional reporting tools and resources early in 2009.

For more information, contact Dave Bohley (

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