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Fannie, Freddie Replace HAMP with Flex Modification Program Starting October 2017

Fannie Mae and Freddie Mac announced on Wednesday their replacement for the Home Affordable Modification Program. The government sponsored enterprises revealed the Flex Modification foreclosure prevention program, which is designed to help America’s families by offering reductions to their monthly mortgage payments.

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.

This new modification will replace the current Fannie Mae Standard and Streamlined Modification offerings on and after Oct. 1, 2017. In the interim, Servicers must continue to evaluate borrowers for Standard and Streamlined Modifications following the evaluation hierarchy.

"We're proud to announce the Flex Modification program, a carefully considered and transparent alternative for homeowners who want to avoid foreclosure in today's post-crisis mortgage environment," said David Lowman, executive vice president of Freddie Mac's Single-Family Business. "We believe it strikes the appropriate balance between borrower relief and economic responsibility."

Those who are less than 90 days behind on their mortgage must submit a Borrower Response Package (BRP) in order to be evaluated for a Flex Modification, which will target a 20% monthly payment reduction and a 40% Housing Expense-to-Income (HTI) Ratio.

Freddie Mac noted that a “high percentage” of those at least 60 days delinquent would be eligible, and in some cases it could also be an option for those who are current on the mortgage or less than 60 days late.

However, that latter group would need to occupy their homes in order to get relief.

For those more than 90+ days delinquent, the program targets the same 20% payment reduction, but requires no “borrower documentation.”

In other words, they realize you’re in imminent danger of foreclosure, so they’re going to make it easy for you to get payment assistance.

Those who are less than 90 days behind on their mortgage must submit a Borrower Response Package (BRP) in order to be evaluated for a Flex Modification, which will target a 20% monthly payment reduction and a 40% Housing Expense-to-Income (HTI) Ratio.

Freddie Mac noted that a “high percentage” of those at least 60 days delinquent would be eligible, and in some cases it could also be an option for those who are current on the mortgage or less than 60 days late.

However, that latter group would need to occupy their homes in order to get relief.

For those more than 90+ days delinquent, the program targets the same 20% payment reduction, but requires no “borrower documentation.”

In other words, they realize you’re in imminent danger of foreclosure, so they’re going to make it easy for you to get payment assistance.

In any case, the program will also allow for principal forbearance to an 80% mark-to-market loan-to-value ratio (MTMLTV), but this amount must not exceed 30% of the unpaid principal balance.

Flex Modification Eligibility

– Mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac
– Must be 60 or more days delinquent unless owner-occupied and in imminent default
– Must submit a Borrower Response Package*
– Must have an eligible hardship
– Must verify income
– Must have been originated 12 months prior to evaluation date
– Must target a 20% principal and interest payment reduction and 40% front-end DTI
*If 90 days+ delinquent, a Borrower Response Package is not required, and servicer is not required to confirm a borrower’s hardship or income.

Ineligible for Flex Modification

– FHA, VA, and USDA loans
– Mortgages subject to recourse
– Mortgages secured by second homes or investment properties less than 60 days late
– Mortgages that have been modified three or more times previously
– Mortgages approved for a short sale or deed-in-lieu
– Mortgages under a different modification program
– Mortgages that don’t make it through the trial period or aren’t brought current

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