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Flex Modification


A Flex Modification is a loss mitigation solution designed to resolve delinquencies and help homeowners remain in their homes. When a Borrower is experiencing a hardship that resulted in a permanent or long term decrease in income or increase in expenses, you may evaluate that Borrower for a Freddie Mac Flex Modification.

A modification is a written agreement that the Servicer  enters into with the Borrower  that permanently changes one or more of the original terms of the Note, such as:

  1. An increase in the amount of the UPB caused by capitalization of interest or non-interest arrearages, Escrow amounts and/or other advances
  2. A change in the Note Rate
  3. A change in the monthly payment
  4. A change in the maturity date
  5. A forbearance of a portion of the principal balance (no write-off or permanent reduction of the UPB, delinquent interest or other non-interest arrearages of the Mortgage is allowed)
  6. Change in the product type (e.g., an ARM to a fixed-rate Mortgage)

Eligibility Criteria

The Servicer must ensure that the (a) Borrower (b) Property and (c) Mortgage eligibility requirements are met under Guide Section 9206.5 Eligibility requirements for a Freddie Mac Flex Modification®:

Borrower Eligibility

The Borrower must:

  • Complete a BRP (Borrower Response Package)
  • Be 60 days or more delinquent OR, if determined to be in imminent default and that at least one Borrower occupies the property as a Primary Residence, may be current or less than 60 days delinquent
  • Have an eligible hardship under Guide Section 9202.2 Verifying a Borrower's hardship
  • Have a stable verified income to support a monthly payment

Refer to Guide Section 9206.7 Determining imminent default for a Freddie Mac Flex Modification® for a breakdown of the imminent default evaluation and business rules. 

Property Eligibility

Property must be:

  • Owner Occupied (Primary Residence) or

  • Second Home or Investment Property

Mortgage Eligibility

Review Guide requirements for more information on exclusions, documentation requirements, determining workout terms and closing a modification.