To decrease their monthly payment by about one-third, borrowers with loans backed by Fannie Mae or Freddie Mac can have their interest rates recalculated and their mortgage terms extended to 40 years. Under the Streamlined Modification Initiative, they must be 90 days to 24 months delinquent on their mortgages, have a first mortgage that is at least 12 months old. The amount they owe must be at least 80 percent of their home's value. And they must make three trial payments on time. This new option gives delinquent borrowers another way to avoid foreclosure, according to the Federal Housing Finance Agency, which regulates Fannie and Freddie. Previous programs have required borrowers to provide financial, income and hardship documentation. That created bottlenecks for mortgage services and limited the effectiveness of the programs. These documents are not required under the new program. Borrowers who owe more than their homes are worth (about one in five homeowners) will pay no interest on up to 30 percent of their unpaid balance. The Streamlined program will begin on July 1, 2013 and end Aug. 1, 2015. By July 1, 2013 mortgage servicers must identify delinquent borrowers and send them a letter offering modification.