Modify Your Own Mortgage with Fannie Mae Help

by Vanessa from Schererville, IN and by Karen from Boron, CA

Ask Kate how to modify your mortgage by asking Fannie Mae for help: If you've been through a loan modification, you know how unpredictable the process can be. Less than a decade ago, few loan servicers even entertained the notion of redoing mortgage terms without a refinance. But when the financial market crashed, ushering the US into a recession that resembled the Great Depression, modifications began to dominate water cooler conversations.


Even so, the process of modifying a home loan is still mysterious to the majority of distressed borrowers. Take for instance Vanessa. She is trying to modify her mortgage terms by paying a third party, a law firm, to go to bat for her. And she is STILL having problems.

Where I tell her to turn for help might surprise you.

Home Loan Modification

By Vanessa from Schererville, IN
Modify Your Own Mortgage with Fannie Mae's Help


Long story short, hiring a third party to help me with home loan modification. I am getting conflicting informations.

My loan is Fannie Mae loan with BAC. My law firm (third party) told me that they will be asking for 2% interest rate loan and also for principal reduction.

My lender says that Fannie Mae does not give either of those anymore since the end of 2013 and that the lowest rate I can get is 4.25%.

Then, when I brought this to the attention of the manager of the third party I am working with, he said that program was prolonged (extended) beyond 2013.

I don't know whom to believe? Help?

***zz-portrait-left.shtml*** Ask Kate answers: Home Loan Modification

Hi Vanessa,

I'm afraid it is correct, as of May 2014, the federal sponsored program, Making Home Affordable, says that principal reductions are not available to homeowners with Fannie Mae or Freddie Mac mortgages.

Of course, there is no law stopping a third party from requesting a loan servicer of a Fannie Mae mortgage to pay down your principal balance. But it is doubtful that they can talk them into it. Read about principal reductions and eligibility requirements here. This leads me to question why a firm you are paying to handle your mortgage modification uses this plan of action. Are they incompetent? Or are they shooting less than straight with you? I don't know. But now you understand why I am not in favor, in most cases, of paying a third party to negotiate with lenders on a homeowner's behalf.

See why I think homeowners can and should handle their own mortgage modifications.

Now even though I advocate handling your own modification process, I also encourage you to call Fannie Mae directly for assistance! But be prepared. Your loan servicer will try to stop you from talking with Fannie (or Freddie). However, I doubt your popularity rating with the lien holder is your main concern.

Now I can't guarantee getting Fannie Mae involved will result in a loan modification approval. But I have seen loan servicers suddenly turn cooperative when they realize the homeowner is in touch with Fannie Mae. Funny how that works.
Call 800-7FANNIE for your nearest Fannie Mae Mortgage Help Center Network where you can get help by telephone, email, and in-person.
Best wishes,

P.S. Are you skeptical that Fannie Mae won't get involved? Read this direct quote from the Fannie Mae website!
"If you've contacted your mortgage company and have not received help or if you need additional support, a Fannie Mae Mortgage Help Center can assist you."
Learn even more about handling your own mortgage modification from homeowners in similar situations.

Need Refinance or Modify My Mortgage

By Karen C. from Boron, CA
Need Refinance or Modify My Mortgage


What can I do? My husband died in 2010. We had just financed (20 year) a new manufactured home on property we had paid off.

But credit union insisted on the property being in the loan.

I was left with some (very little) life insurance, went to them with $20,000.00 and asked for a mortgage modification. But no, I had no income.

I now receive a small check from VA and am getting paid to go to school. I was late ONE month when school ended and had to wait three months for another school check.

My payments are $699.00 a month. All I'm asking is for the bank to modify my mortgage to a regular 30 year mortgage to lower my payments. I can't lose my home.

***zz-portrait-left.shtml*** Ask Kate answers: Need Refinance or Modify My Mortgage

Hi Karen,

I'm sorry for your loss. These must have been trying years for you.

While it is true that underwriting guidelines for loan modification approvals require sufficient income, don't let that discourage you from pursuing an affordable house payment.

In fact, I think you are a good candidate for enlisting the help of a housing counselor provided by the Making Home Affordable Program (MHA). Go to Free MHA Housing Counselors to learn how to get started.

Additionally, Making Home Affordable's counselors, accompanied by Fannie Mae, Freddie Mac, and loan servicers, visit cities across America to meet face-to-face with struggling homeowners. Often, a mortgage modification can be accomplished in one day at these events. Go here to learn more about the local events that help homeowners avoid foreclosure.

I also want you to get in the habit of checking in with my blog where I announce the upcoming schedule of the local homeowner events.

Very best wishes,


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