The Wall Street Journal announced a major new loan modification effort by Fannie and Freddie.  It is designed to speed up the loan modification procees and slow down foreclosures. 

The progam sets ups stream lined procedures for qualifying, reviewing and accepting or rejecting loan mods.  As with all these loan mod programs there is destined to be a comparison between what the property is worth now and what the net present value of that income stream would be compared to what can be achieved by a loan mod. 

Questions and concerns.

1. I read a few seperate reports and there seems to be some confusion as whether principle reduction can be negotiated. (which to me would be the deal maker or breaker in many loan mod vs short sale comparisons.  

2.  Will these programs change the very high  re-default rate without principle reductions.  

3. Will these loan modifications - effect the borrowers anti-deficiency protections? (You should probably have a lawyer review your documents to see if you would still be protected by California's anti deficiency laws.)

4. What will be done with second loans?

5. This program is for people who are 90 days late. Before a homeowner allows themselves to be 90 days late, they should determine all of their options.

6. This program does not apply to investment properties. (some lenders will negotiate loan modifications with investors.)

Loan Modification info