Fannie, Freddie Lower Mod Interest Rate to 3.875%

Beginning Nov. 13, Fannie Mae will lower its standard modification interest rate from 4% to 3.875%. Freddie Mac lowered its standard modification interest rate by the same margin, with its change taking effect Nov. 5.

The new standard modification interest rate of 3.875% is the lowest the rate has ever been.

Fannie announced the change Friday in an email sent to its servicers, while Freddie’s change was posted on its website.

According to Fannie Mae’s website, 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.

In the note sent to servicers, Fannie said that servicers must use the new interest rate for any mortgage loan modification evaluation conducted on or after Nov. 13, while Freddie said that servicers must use the new interest rate for any mortgage loan modification evaluation conducted on or after Nov. 5.