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Freddie Mac Flex Modification

The Freddie Mac Flex Modification (Flex Modification) offers Servicers an easier, flexible way of helping more borrowers qualify for a loan modification in a changing housing environment.

Mortgage and Borrower Eligibility

Eligible Property Types

While the Flex Modification leverages the Freddie Mac Standard and Streamlined Modifications, a few significant changes from the Standard Modification include:

  • The housing-to-income ratio component for borrowers less than 90 days delinquent has changed from less than or equal to 55 percent with a 10 percent floor to less than or equal to 40 percent.
  • No choice of amortization terms for borrowers with a mark-to-market loan-to-value (MTMLTV) ratio less than 80 percent.
  • You must now forbear principal down to a 100 percent MTMLTV ratio (not to exceed 30 percent of the unpaid principal balance rather than the 115 percent MTMLTV ratio previously allowed under Standard and Streamlined Modifications).

Evaluation Hierarchy

Prior to implementing the Flex Modification, Servicers must follow the existing loss mitigation evaluation hierarchy as described in Guide Section 9201.2. Once a Servicer implements the Flex Modification, they must discontinue evaluating borrowers for the Standard and Streamlined Modifications, and instead evaluate borrowers in accordance with the evaluation hierarchy outlined in this Guide Bulletin.

What Servicers Need to Do

Review Single-Family Seller/Servicer Guide (Guide) Bulletin 2016-22 and Guide Bulletin 2017-1 requirements for the Flex Modification, including the eligibility requirements, modification terms, requirements for a streamlined offer for the Flex Modification, evaluation hierarchy, and processing and reporting requirements. 

Servicers may start evaluating borrowers for a Flex Modification Trial Period Plan, effective February 15, 2017. Starting May 1, 2017, Workout Prospector® will be updated so that Servicers can submit data relating to Flex Modification Trial Period Plans.

Servicers must begin evaluating their portfolios using the criteria described in the Determining the Terms of the Flex Modification table of Guide Bulletin 2016-22 no later than October 1, 2017.

On and after October 1, 2017, this new modification will replace the current Freddie Mac Standard and Streamlined Modifications. In the interim, Servicers will be able to leverage the existing Standard and Streamlined Modifications.

We'll update Servicers directly in 2017 with more about the Flex Modification. In the meantime, we encourage you to bookmark this new Freddie Mac Flex Modification webpage for modification information and reminders.

Training and Resources

A reference guide and tutorial on the Flex Modification will be available on our Learning Center in the first quarter of 2017. Servicers may also download and save the Freddie Mac Flex Modification term sheet for a quick, visual reference to the new modification details.

Read and download the new Flex Modification Fact Sheet.

Reminder

The MyCity Modification, Principal Reduction Modification and Home Affordable Modification Program (HAMP®) expire at the end of 2016:

  • All MyCity Modification Trial Period Plans must have had a start date of no later than
    December 1, 2016.
  • All solicitations for the Principal Reduction Modification must have been sent on or before December 31, 2016.
  • Borrowers must have submitted a complete Borrower Response Package (BRP) no later than December 30, 2016, to be evaluated for HAMP. Servicers must have completed such evaluations within 30 days of the Servicer's receipt of the complete BRP.

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