Flex Modification®
Overview
A Freddie Mac 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 Flex Modification.
A Flex 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:
- An increase in the amount of the unpaid principal balance (UPB) caused by capitalization of interest or non-interest arrearages, escrow advances and/or other advances.
- A change in the note rate.
- A change in the monthly payment.
- A change in the maturity date.
- 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).
- Change in the product type (e.g., an adjustable-rate mortgage (ARM) to a fixed-rate mortgage).
On May 29, 2024, Single-Family Seller/Servicer Guide (Guide) Bulletin 2024-E announced updates to Flex Modification requirements, with the goal of expanding the eligible population while achieving more equitable payment relief outcomes across all modifications. While Servicers must begin evaluating eligible borrowers for the updated Flex Modification on or after December 1, 2024, we encourage Servicers to begin implementation as early as November 1, 2024.
As of December 1, 2024, Workout Program Type FLX and FLXD will be retired for new evaluations. For borrowers being newly evaluated for Flex Modifications and disaster Flex Modifications on and after this date Servicers must select FLXM or FLXDM, respectively. These updates ensure the workout adheres to the updated Flex Modification terms announced in Bulletin 2024-E. For any Flex Modification or disaster Flex Modification Trial Period Plans in approved status prior to this date, Servicers should continue to utilize FLX and FLXD, respectively, for Workout Approval (WAReq) and Settlement (SETReq) submissions.
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:
Refer to Guide Section 9206.7 Determining imminent default for a Flex Modification® for a breakdown of the imminent default evaluation and business rules. |
| Property Eligibility | Property must be:
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| Mortgage Eligibility |
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Review Guide requirements for more information on exclusions, documentation requirements, determining workout terms and closing a modification.