Flex Modification
Overview
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:
- An increase in the amount of the UPB caused by capitalization of interest or non-interest arrearages, Escrow amounts 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 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:
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:
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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.