With the Home Affordable Modification Program (HAMP) set to expire in less than three weeks, Fannie Mae has designed a foreclosure prevention program, Flex Modification, to help America’s families by offering reductions to their monthly mortgage payments. According to the announcement Wednesday, from the GSE, this program was developed in alignment with Freddie Mac at the direction of the Federal Housing Finance Agency (FHFA).
“The new Flex Modification announced by Fannie Mae and Freddie Mac (the Enterprises) today was designed based on lessons learned from crisis-era loan modification programs to help borrowers stay in their homes and avoid foreclosures whenever possible,” says Sandra Thompson, FHFA Deputy Director. “The Flex Modification also reflects input received over the course of extensive engagement with lenders, mortgage insurers, consumer advocates, and other stakeholders. By avoiding the high costs associated with foreclosures, the Flex Modification will result in significant savings for the Enterprises and taxpayers. And it will provide borrowers who face permanent hardships with a sustainable modification.”
Fannie Mae adds that the Flex Modification is anticipated to provide a 20 percent payment reduction for eligible borrowers. Specifically, the GSE says that this would apply to a high percentage of those who are at least 60 days delinquent and could also be an option for those who are current or less than 60 days delinquent on a case by case basis.
“The Flex Modification is an adaptive program that will allow us to continue to assist struggling homeowners in a changing housing environment and simplify the process for servicers to deliver those solutions,” says Bill Cleary, VP of Single-Family Servicing Policy, Fannie Mae. “We believe the program is flexible to adjust for regional and even local differences in housing. It provides the greatest amount of assistance to those areas in need.”
According to the announcement, the new modification will replace the current Fannie Mae Standard and Streamlined Modification offerings on and after October 1, 2017. Fannie Mae does note, however, that during the interim, they urge servicers to continue to evaluate borrowers for Standard and Streamlined Modifications following the evaluation hierarchy.