What You Need to Know About Fannie, Freddie Credit Modification Program

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If you find it difficult to make your monthly mortgage payments, Flex Modification can help you reduce your monthly payment, get a longer repayment period, and possibly even a lower interest rate. Here’s what you should know about the Fannie Mae and Freddie Mac Flex Modification Program and whether this is the right step for you to apply.



large front lawn: Exterior of a two-story single-family home with attached garage and driveway


© Artazum / Shutterstock
Exterior of a two-story single-family home with attached garage and driveway

What is Flex Modifier?

Flex Modification Program (FMP) is a common loan modification program designed to help homeowners who are experiencing long-term or permanent financial difficulties. It can be used as a way to avoid foreclosure

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If you qualify, you can extend the loan term to 40 years and reduce principal and interest payments to 20 percent. In some cases, the lender may also lower the interest rate on the loan.

In 2016, FMP replaced the Home Affordable Modification Program (HAMP), Standard Modification, and Optimized Modification, merging them all into one program for simplicity and flexibility.

FMP is beneficial for both borrowers and lenders. The borrower can stay in their home while the lender can save money without going through the foreclosure process.

How does the Flex Mod work?

If you are late on your mortgage payments, you can apply for Flex Modification through your lender. However, if your delay is between 90 and 105 days, Fannie Mae and Freddie Mac require your lender to review your situation to determine if you qualify.

If you are eligible, the lender can do one or more of the following:

  • Reduce your monthly payment by 20 percent.
  • Add overdue amounts, including interest, to your master balance so that not everything is paid up front
  • Extend maturity to 40 years
  • Lower your interest rate
  • Place patience the non-interest bearing portion of your principal that will be payable when the loan expires or you repay it early

Your lender will review your situation to determine what steps to take. Once this decision is made, you enter a trial period during which you will be making payments in accordance with the program over several months. If you complete this period, the lender will return your loan to its current status and the change in your loan will become permanent.

Why should you consider modifying Flex?

An FMP can be a great option for those who are delaying mortgage payments due to financial difficulties and do not expect their situation to change. This long-term solution can help you avoid foreclosures that can damage your credit history and uproot your life, forcing you to look for another place to live.

After the trial period ends, a flexible modification also brings your loan to its current state, which does not negate the fact that you are overdue, but can stop further damage to your credit rating.

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If the arrangement fits your budget, you can stay in your home with less financial hardship.

Who is eligible for the Flex Modification Program?

Ultimately, your lender will determine if you are eligible to change Flex. First, your loan must be owned or guaranteed by Fannie Mae or Freddie Mac, which means it must be a regular loan. If you have a government-backed loan such as an FHA, VA, or USDA loan, these programs have separate loan modification options that you can use.

Some of the requirements for participation in the program include:

  • The term of your mortgage is at least one year.
  • Your loan is the first mortgage loan, which means that your lender will be the first to get paid if you defaulted and the foreclosed home is sold.
  • If the loan is current or less than 60 days overdue, it must be for your primary residence. If it is a second home or investment property, you must be 60 days or more late.
  • Your lender has determined that your loan will inevitably default, which means that the lender believes you can no longer afford to pay, even if the loan is current or less than 60 days past due.

What is considered a hardship when changing a loan?

Under normal circumstances, lenders can accept any of the following forms of financial hardship:

  • Unemployment
  • Decreased income due to circumstances beyond your control
  • Increased housing costs due to circumstances beyond your control
  • Natural or man-made disasters affecting your property or place of work
  • Long-term or permanent disability
  • Serious illness of a borrower, co-borrower or dependent family member
  • Divorce or legal separation
  • Separation of borrowers not related to marriage, civil union or similar family partnership
  • Death of the borrower or primary or secondary breadwinner
  • Moving to work more than 50 miles
  • Other difficulties described by the borrower

Federal Agency for Housing Finance expanded these conditions also include homeowners experiencing ongoing financial hardship associated with the pandemic.

Regardless of the type of financial hardship you face, you will need to provide documentation during the application process to prove eligibility.

How to apply for a Flex change

If your lender has not yet contacted you about the Flex modification, please contact and ask for a borrower’s response packet. You will need to complete and sign a Borrower Assistance Form and Form 4506-T or Form 4506T-EZ from the IRS, which allows the lender to request a transcript of your tax return. You will also need to provide proof of income and your financial difficulties.

Submit the package to your lender as soon as you complete it and they will review your request.

Please note that if you are 90 days or more late, the lender uses a streamlined process that does not require you to complete the package.

Other ways to get help with mortgage payments

If your financial difficulties are temporary, Flex Modification may not be the right tool for you. Here are some alternatives to consider:

  • Patience: Your lender may offer a grace period that suspends your monthly payments for a period set by the lender. However, this does not erase your debt, so you will need to receive these payments later.
  • Own modification: Many mortgage lenders have set up their own internal modification programs with terms different from those of the FMP. Check with your lender to see if they offer a program that suits you best.
  • Charity organisations: Some charities provide housing assistance, although the eligibility and amount of assistance may vary from organization to organization. Examples include The United Way, The Salvation Army, Catholic Charities of the United States, and the St. Vincent de Paul Society of Marin County.
  • Friends and family: Depending on your situation, you can ask people in your circle of friends and family for help. Just make sure you understand the impact such a request can have on your relationship, especially if you cannot repay them.

Whatever you do, take your time to research and compare all of your options to find the one that works best for your situation and needs.

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