"Flex Modification" Designed as New HAMP

By: Jann Swanson • Thu, Dec 15 2016, 9:24 AM

Both Freddie Mac and Fannie Mae will be rolling out a new foreclosure prevention programs next year to replace the expiring Home Affordable Mortgage Program (HAMP). The program, which both GSEs are calling Flex Modification, was developed at the direction of the Federal Housing Finance Agency (FHFA).

Flex is expected to provide a 20 percent reduction in mortgage payments for eligible borrowers. A high proportion of homeowners who are 60 days or more past due on their payments are expected to be eligible and the modification could also be an option for those who are current on their mortgages or less than 60 days delinquent in certain situations.

The GSEs' servicers must implement the new program by October 1, 2017. HAMP expires at the end of this month and during the resulting gap the GSEs standard and streamlined modification programs will remain in effect.

Press releases from each of the companies said the new program incorporates input from a wide range of industry participants and lessons learned from other programs and grew out of a white paper published earlier this year by FHFA and the Departments of Treasury and Housing and Urban Development called Guiding Principles for the Future of Loss Mitigation. Those principles are accessibility, affordability, accountability, sustainability, and transparency.

FHFA Deputy Director Sandra Thompson said, "The new Flex Modification announced by Fannie Mae and Freddie Mac today was designed based on lessons learned from crisis-era modification programs to help borrowers stay in their homes and avoid foreclosures whenever possible. The 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 GSEs and taxpayers. And it will provide borrowers who face permanent hardships with a sustainable modification."PageContent