How Can the Flex Modification Program Prevent Foreclosure?

 Posted on August 24, 2021 in Foreclosure

Anyone can encounter financial problems that affect their ability to meet their obligations. Homeowners who are struggling to pay bills may be concerned about what will happen if they get behind on their mortgage payments. Those who are worried about the possibility of foreclosure will want to understand their options, and in some cases, they may qualify for mortgage relief through the Flex Modification Program. 

Eligibility for the Flex Modification Program

To determine whether they qualify for the Flex Modification Program, homeowners will need to understand who owns their loan. This program is available for mortgages owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). While a mortgage may have originated with a bank or another private lender, many mortgages are sold to other investors, including Fannie Mae and Freddie Mac. While these loans may then be sold to another investor, they will often be guaranteed by Fannie Mae or Freddie Mac, allowing homeowners to take advantage of relief through the Flex Modification Program.

To qualify for the Flex Modification program, a homeowner will need to meet certain requirements. The mortgage must have originated at least one year prior to being evaluated for relief, and a loan must be a conventional first mortgage, giving the lender the right to be repaid first if a foreclosure sale is completed. A homeowner may seek relief if they are more than 60 days delinquent on mortgage payments, although if the property is the homeowner’s primary residence, they may seek relief if they are current on mortgage payments or are less than 60 days delinquent, including in cases where a lender determines that they are in “imminent default” and will no longer be able to make monthly mortgage payments based on their financial circumstances. While a homeowner will usually be required to provide documentation of financial hardship, proof of income, and other information, those who are more than 90 days delinquent may qualify for streamlined procedures that will allow them to receive a modification more quickly and with fewer documentation requirements.

The Flex Modification Program will allow a borrower to complete a loan modification that will reduce the amount of their monthly payments by up to 20 percent. This may be done by adjusting the interest rate or extending the term of the loan up to a total of 40 years. Missed payments may be added to the principal balance of the loan rather than being due immediately. In some cases, a borrower may also receive a forbearance of a portion of the loan’s principal balance, which will exempt this amount from consideration when calculating monthly payments. The amount in forbearance will usually need to be repaid if the home is refinanced or sold in the future.

Contact Our North Chicago Foreclosure and Loan Modification Attorneys

If you have experienced financial difficulties that have affected your ability to make mortgage payments, Newland & Newland, LLP can help you determine whether you qualify for the Flex Modification Program or whether other loan modification options are available. We will work to determine the best ways you can avoid foreclosure and maintain financial stability. Contact our Round Lake foreclosure defense lawyers today by calling 847-549-0000 and scheduling a free consultation.

Sources:

https://www.nerdwallet.com/article/mortgages/new-fannie-freddie-flex-loan-modification-what-to-know

https://sf.freddiemac.com/content/_assets/resources/pdf/other/flex_mod_ref_guide.pdf

https://www.knowyouroptions.com/options-to-stay-in-your-home/overview/modify-overview/flex-modification