Fannie Mae and Freddie Mac today announced new foreclosure prevention programs designed to replace the Home Affordable Mortgage Program, which expires at the end of this year. The GSEs will offer a Flex Modification, which they said was developed with input from a “wide range” of industry stakeholders.
The Fannie and Freddie Flex Modification would provide a 20 percent payment reduction to eligible borrowers. Most borrowers who are at least 60 days delinquent would be eligible. The new modification programs must be implemented by Oct. 1, 2017, when they replace Fannie and Freddie’s existing standard and streamlined modifications; until then, servicers must evaluate borrowers for modifications using the existing protocols.
The Flex Modification “was designed based on lessons learned from crisis-era loan modification programs to help borrowers stay in their homes and avoid foreclosures whenever possible,” said Sandra Thompson, deputy director of the Federal Housing Finance Agency. She added that it “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 [GSEs] and taxpayers.”