Fannie Mae and Freddie Mac have announced that they’ve created a replacement initiative for their recently expired Home Affordable Modification Program (HAMP). The new initiative is being called the “Flex Modification Foreclosure Prevention Program”, and will take effect on and after October 1, 2017.
According to the GSEs’ press releases, this new Flex Modification Program is designed to “help America’s families by offering reductions to their monthly mortgage payments.”
The new program was jointly developed by Fannie Mae and Freddie Mac at the direction of the FHFA, and includes components of both HAMP as well as the GSEs’ standard and streamlined modification programs. In addition, it also incorporates input from a wide range of industry participants—including lenders, mortgage insurers, consumer advocates, and other stakeholders—as well as lessons learned from earlier programs.
The new Flex Modification Program is expected to provide a 20% payment reduction for eligible borrowers, in which a high percentage of those who are at least 60 days delinquent would be eligible. The modification could also be an option for those who are current or less than 60 days delinquent in certain situations.
As stated by the GSEs, the “program was shaped by a whitepaper published in July 2016 by the U.S. Department of the Treasury in conjunction with the U.S. Department of Housing and Urban Development (HUD) and the FHFA titled, Guiding Principles for the Future of Loss Mitigation. It laid out five factors (accessibility, affordability, accountability, sustainability, and transparency) that should form the foundation of future loss mitigation programs.”
The new Flex Modification Program, as mentioned above, will replace both Fannie Mae and Freddie Mac’s current modification offerings on and after October 1, 2017. In the meantime, servicers must continue to evaluate borrowers for standard and streamlined modifications following the evaluation hierarchy.
For more information regarding Fannie Mae and the new Flex Modification Program, click here.
For more information regarding Freddie Mac and the new Flex Modification Program, click here.
To see the FHFA’s statement about the new Flex Modification Program, click here.