The federal government previously offered the Home Affordable Modification Program, but it expired at the end of 2016.  Now, Fannie Mae and Freddie Mac have a foreclosure prevention program, Flex Modification Program, which went into effect, October 1, 2017.  If your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, you may be eligible for this program.


Created under the direction of the Federal Housing Finance Agency, Flex Modification fills the need for a long term for a foreclosure prevention solution now that HAMP has expired.  A loan modification is when a lender agrees to change the original terms of your mortgage - often by extending the loan term or reducing the principal balance or interest rate - to lower your monthly payments.  

The program is called Flex Modification because if offers lenders flexibility in evaluating borrowers compared with previous modification programs.  With HAMP, lenders could adjust the terms of a qualified loan until a mortgage payment equaled 31% of the borrowers income.  The Flex Modification program applies those same measures, but is also allow lender to consider how many days delinquent borrowers are and the value of their home.  

A modification loan benefits both lenders and borrowers: it's usually less expensive and time consuming than a foreclosure.



One potential downside to a loan modification:  it may be added to your credit report and could negatively reflect your credit score.  The resulting credit dip won't be nearly as nearly as  foreclosure but could affect your ability to qualify for other loans for a time.  Be aware that, no matter how your loan is modified, your mortgage loan could be extended, meaning it will take longer to pay off your loan, and will cost your more in interest.  But for homeowners, on the brink of losing their homes, the benefits of a loan modification can far outweigh the potential credit risks and added interest.