FHFA Announces Enhancements to Flex Modification for Borrowers Facing Financial Hardship
IMMEDIATE RELEASE
05/29/2024
Washington, D.C. – The Federal Housing Finance Agency (FHFA) today 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.
“The Enterprises have completed over half a million modifications through their Flex Modification offerings since they were implemented in 2017, helping struggling borrowers throughout the country,” said Director Sandra L. Thompson. “The Flex Modification enhancements will support sustainable homeownership by allowing more eligible borrowers facing hardships to remain in their homes by achieving a meaningful mortgage payment reduction in the current environment of elevated interest rates and home prices.”
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 (P&I) 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.
Since 2011, under the Servicing Alignment Initiative, FHFA and the Enterprises have developed policies to allow servicers to better resolve mortgage payment delinquencies. These policies have helped to keep struggling borrowers in their homes whenever possible, while minimizing losses to the Enterprises and taxpayers.
The enhanced Flex Modification policies will become effective on December 1, 2024.
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