The overseer of Fannie Mae and Freddie Mac is directing mortgage loan servicers this summer to begin offering a simplified mortgage modification to some struggling borrowers whose loans are backed by the two enterprises.

Beginning July 1, the Federal Housing Finance Agency said, loan servicers will be required to reach out to eligible, seriously delinquent borrowers and offer them a three-month trial loan modification without the borrower providing any financial documents or hardship letters. The payments could decrease more if the homeowner documents income and financial difficulty.

While different than the Obama administration's Home Affordable Modification Program, the program announced Wednesday is similar to a short-lived effort under HAMP that offered no-doc trial modifications. That effort, designed to get more struggling homeowners into the program quicker, also led to mortgage redefaults and for a time, marred HAMP program results.

Mortgage principal writedowns, considered a key ingredient of a housing recovery by the Obama administration because they benefit delinquent and seriously underwater borrowers, are not included in the program. But eligible borrowers who owe far more on their loan than the value of the home could see a portion of that amount tacked onto the end of the loan with no interest charged, according to the FHFA.

The FHFA and Edward DeMarco, its acting director, have long been under fire for refusing to allow principal writedowns of Fannie Mae- and Freddie Mac-backed loans to make them more affordable. Earlier this month, nine state attorneys general wrote a letter calling for DeMarco to be replaced.

Under the streamlined program, borrowers may be considered eligible for a streamlined trial modification if they hold first lien mortgages on primary homes, second homes and investment properties that are either owned or guaranteed by Fannie or Freddie and if they are 90 days to 24 months behind on payments. The loans must also be at least one year old and have a loan-to-value ratio of 80 percent or higher.

Potential program participants will be contacted by their loan servicers and offered a specific dollar amount to pay for three months. If they successfully complete the trial period, they will receive a permanent modification, based on a fixed interest rate, for 40 years. Providing financial information could lower that initial trial payment amount, the FHFA said.

In a yearlong test of the program, the FHFA said 70 percent of the borrowers contacted by servicers started trial modifications. Half of that group successfully completed the trial period and were converted into permanent loan modifications. The borrowers' average monthly payment declined by 30 percent.

Figures on how many borrowers participated in the pilot program were not immediately available from the agency.

"We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings," DeMarco said in a statement.

The FHFA noted that homeowners may be able to secure more affordable payment terms under HAMP, which reduces a borrower's monthly payments to 31 percent of gross income.

Early reaction to the program was muted.

"While I appreciate every effort that's being made to address the ongoing foreclosure crisis, to really get at the heart of the problem, we really have to get at more sustainable solutions," said Debra Olson, executive director of the DuPage Homeownership Center in Wheaton, Ill. "Judging by history, this is not one of those long-term sustainable solutions. We have seen such a history of redefaults in similar programs."

The agency said it has safeguards in place to prevent strategic defaults, the practice whereby financially stable homeowners purposely stop making their payments in order to receive better terms.

The program will end Aug. 1, 2015.

• Read more articles by MARY ELLEN PODMOLIK

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