Section 3555.304 - [Effective 2/11/2025] Streamline servicing options(a)General.(1) Lenders must exhaust traditional servicing options outlined in this part without received a completed package to be used in evaluating the borrower for traditional servicing options and have sent a demand letter in accordance with § 3555.306 to the borrower prior to consideration of streamline servicing options.(2) Use of streamline loan servicing does not change the terms of the loan note guarantee.(3) Streamline options may be provided to the borrower with at least a 10 percent reduction to their principal and interest payment with no consideration of the borrower's financials.(b)Conditions for streamline servicing options. In addition to the requirements in § 3555.303(a) , the following conditions apply to all special loan servicing:(1) The borrower must be at least 90 days past due and prior to initiation of any acceleration or foreclosure action.(2) The borrower must successfully complete a trial payment plan of sufficient duration, as determined by the Agency, to demonstrate that the borrower will be able to make regularly scheduled payments as modified by the special loan servicing.(3) Expenses related to streamline loan servicing including, but not limited to, title search and recording fees, shall not be charged to the borrower.(4) Capitalization of late charges and lender fees is not permitted in the special loan servicing option.(c)Extended streamline loan modification. The Lender may modify the loan by reducing the interest rate to a level at or below the maximum allowable interest rate and extending the repayment term to 40 years from the date of loan modification. The servicer may limit the extension to 30 years if limited by any investor or pooling restrictions. The loan guarantee will apply to loan terms extending beyond the 30-year loan term from the date of origination when a loan modification meets the criteria set forth in this section. (1) Streamline loan modifications may capitalize all or a portion of the arrearage and/or reamortization of the balance due including, tax and insurance advances and past due Agency annual fees imposed by the lender. Late charges and lender fees may not be capitalized.(2) Streamline loan modifications must be a fixed interest rate and cannot exceed the current market interest rate at the time of modification. When reducing the interest rate, the maximum rate is subject to paragraph (c)(3) of this section.(3) The term shall be extended to a maximum of 40 years as noted above to provide the borrower with at least a 10 percent reduction in their principal and interest payment.(4) If the targeted mortgage payment reduction cannot be achieved using a modification as described in this section, the loan is not eligible for streamline loan servicing and foreclosure may be initiated. 78 FR 73941 , Dec. 9, 2013, as amended at 81 FR 6430 , Feb. 8, 2016; 84 FR 70886 , Dec. 26, 2019 84 FR 70886 , 4/24/2020; 89 FR 66194 , 2/11/2025