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Fannie Mae has announced its new Flex Modification foreclosure prevention program, designed to help families by offering reductions to their monthly mortgage payments. The Flex Modification leverages components of Fannie Mae's Home Affordable Modification Program (HAMP), which is set to expire at the end of 2016, and the Fannie Mae Standard and Streamlined Modifications, which will be replaced by the Flex Modification in late 2017.
The new program was developed in alignment with Freddie Mac at the direction of the Federal Housing Finance Agency (FHFA).
The Flex Modification incorporates input from a wide range of industry participants, as well as lessons learned from earlier programs. It is expected to provide a 20 percent payment reduction for eligible borrowers. 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.
The program was shaped by a White Paper published in July 2016 by the U.S. Department of the Treasury in conjunction with the U.S. Department of Housing & Urban Development (HUD) and 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 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," said Bill Cleary, vice president of Single-Family Servicing Policy for 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."
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.