In December 2016, in an effort to assist borrowers, Fannie Mae announced the Flex Modification foreclosure prevention program to replace its Fannie Mae Standard and Streamlined Modifications program. The new program was developed with Freddie Mac at the direction of the Federal Housing Finance Agency. The Flex Modification program offers reductions to monthly mortgage payments and utilizes parts of Fannie Mae’s Home Affordable Modification Program (HAMP), which expired on December 31, 2016.
Many different industry participants provided input for the new program, which is expected to provide a 20 percent payment reduction for eligible borrowers. At this time, a high percentage of borrowers who are at least 60 days delinquent would be eligible for the program, and in certain situations, borrowers who are current or less than 60 days delinquent may also be eligible.
A recent white paper published in July 2016 titled Guiding Principles for the Future of Loss Mitigation listed accessibility, affordability, accountability, sustainability, and transparency as the five factors that should form the foundation of any future federal loss mitigation program.
Officials at Fannie Mae state that they believe the program is flexible to adjust for regional and even local differences in housing. As the new program won't replace the current Fannie Mae Standard and Streamlined Modification offerings until October 1, 2017, servicers must continue to evaluate borrowers for Standard and Streamlined Modifications using the current evaluation hierarchy or standards.
Sandra Thompson, FHFA Deputy Director made the following statement about the program: "The new Flex Modification announced by Fannie Mae and Freddie Mac (the Enterprises). . . was designed based on lessons learned from crisis-era loan modification programs to help borrowers stay in their homes and avoid foreclosures . . .[T[he 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."It remains to be seen how effective the Flex Modification program will be for homeowners. At Loan Lawyers, our South Florida consumer rights and debt defense attorneys may assist individuals fighting financial hardship and foreclosure of their home. For a no-risk, no-cost consultation, contact one of our South Florida consumer defense attorneys today by calling (888) FIGHT-13 (344-4813).