FHFA reported on Fannie and Freddie enhancements, for borrowers facing hardship.
Term Updates
Updates the steps for determining the flex modification terms to expand borrower eligibility and provide more equitable payment reduction to eligible borrowers.
Expands eligibility by revising the mark-to-market loan-to-value based requirements.
Provides more equitable payment reduction by applying the terms incrementally.
Also provides more equitable reduction by targeting a 20% P&I payment reduction.
Letter outlines the steps for determining the new modified mortgage loan terms.
Prior to granting a permanent mortgage loan modification, the servicer must place the borrower into a trial period plan that uses the new modified mortgage loan terms.
Servicer must request prior written approval to deviate from the prescribed steps.
Published revised evaluation notices that must be implemented as of Dec. 1, 2024.
Appendix includes examples related to 20% P&I payment and interest rate reductions.
Effectiveness
Changes may start being implemented Nov. 1, but must be implemented Dec. 1, 2024.
Once implemented, servicer must offer the flex modification to all eligible borrowers.
These policy changes will be reflected in the November 2024 Servicing Guide update.
Jun. 2024 Editorial Update
On Jun. 3, 2024, Reg-track made editorial update to add FHFA regulator, related link.
Oct. 2024 Fannie Flex Modification Terms
On Oct. 2, 2024, Fannie updated Letter LL-2024-02 to update steps for determining flex modification terms in alignment with Freddie and at the direction of FHFA.
Updated revised the mark-to-market loan-to-value (MTMLTV) based requirements.
Additionally, it provided more equitable payment reduction to eligible borrowers by applying the terms incrementally and targeting a 20% P&I payment reduction.
Also published revised Evaluation Notices that must be implemented by Dec. 1, 2024.
When determining the final Fannie Flex Modification terms, the servicer must use the same interest rate as established when determining the terms for the Trial Period Plan.
Clarification is effective upon implementation of updated Flex Modification policy.
Updated Guide with revised steps, will replace interim month with processing month in relation to Flex Modification to align terminology with that used for payment deferral.
Servicers must determine the borrower’s new modified mortgage loan terms for a Fannie Flex Modification, per letter, as early as Nov. 1 but no later than Dec. 1, 2024.
Once implemented, the servicer must offer the Fannie Mae Flex Modification to all eligible borrowers according to the requirements in Lender Letter LL-2024-02.
These policy changes will be reflected in the Nov. 2024 Servicing Guide update.
