FHFA enhances flex modifications for borrowers
The Federal Housing Finance Agency yesterday announced that Fannie Mae and Freddie Mac (the Enterprises) will enhance their Flex Modification policies to allow more borrowers facing longer-term hardships to achieve meaningful payment reductions. The updated Flex Modification policies will promote sustainable homeownership and the safety and soundness of the Enterprises.
Flex Modification is the Enterprises’ loan modification offering that provides a home retention solution for eligible borrowers facing a permanent hardship who can no longer afford to make their regular monthly mortgage payments. The enhanced Flex Modification policies lower a borrower’s monthly payment by incrementally applying the steps below to achieve a 20 percent Principal and Interest payment reduction:
- Reducing the borrower’s interest rate (if eligible);
- Extending the mortgage term; and
- Forbearing principal for borrowers with mark-to-market loan-to-value ratios greater than 50 percent.
Borrowers facing financial hardship should contact their servicer to discuss their unique circumstances to determine their eligibility. Servicers may offer borrowers one of several solutions to resolve a delinquency, including the updated Flex Modification, payment deferral, or a repayment plan depending on borrowers’ individual circumstances. The enhanced Flex Modification policies will become effective on December 1, 2024.
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