Fannie & Freddie Mortgage Modification Interest Rate Drops to Record Low

Beginning May 13, Fannie Mae and Freddie Mac will lower the standard modification interest rate from 3.75% to 3.625%.

For the last two months, Fannie Mae and Freddie Mac’s standard modification interest rate was 3.75%, which itself was the lowest level ever – until now.

The new standard rate of 3.625% is also now one full percentage point lower than the standard modification rate was when Fannie and Freddie established the benchmark rate in January 2012.

When the program began in 2012, the benchmark interest rate was 4.625%.

According to the GSEs, the standard modification program is “designed to help those borrowers who are ineligible for the Home Affordable Modification Program.”

Therefore, the new rate does not extend to HAMP borrowers.

According to information posted to Freddie Mac’s website, servicers must use the standard modification interest rate when determining the terms of a standard modification trial period plan, streamlined modification, trial period plan or a capitalization and extension modification for disaster relief trial period plan.