GSEs Announce Enhancements To Flex Modification

The Federal Housing Finance Agency (FHFA) yesterday announced that Fannie Mae and Freddie Mac will enhance their Flex Modification policies to allow more borrowers facing longer-term hardships to achieve meaningful payment reductions.

Flex Modification is a loan modification program offered by the GSEs, designed to help eligible borrowers facing permanent financial hardship who can no longer afford their regular monthly mortgage payments, providing a solution to retain their homes.

​Per the release from the FHFA, the updated Flex Modification policies will promote sustainable homeownership and the safety and soundness of the Enterprises.  

“The Enterprises have completed over half-a-million modifications through their Flex Modification offerings since they were implemented in 2017, helping struggling borrowers throughout the country,” said Director Sandra L. Thompson. “The Flex Modification enhancements will support sustainable homeownership by allowing more eligible borrowers facing hardships to remain in their homes by achieving a meaningful mortgage payment reduction in the current environment of elevated interest rates and home prices.”  

The enhanced Flex Modification policies lower a borrower’s monthly payment by incrementally applying the steps below to achieve a 20% Principal and Interest (P&I) payment reduction:

• Reducing the borrower’s interest rate (if eligible);  
• ​Extending the mortgage term; and 
• Forbearing principal for borrowers with mark-to-market loan-to-value ratios greater than 50%. 

The enhanced Flex Modification policies will become effective on December 1, 2024. ​