Flex Modification
WHAT IS
Flex Modification
The Flex Modification program allows lenders to help eligible borrowers modify the terms of their mortgage. When a mortgage is modified, it means the terms of the original loan are changed in some way. For example, a loan modification may change the repayment term, reduce the interest rate or lower the monthly payment. The Flex Modification program was created to replace existing mortgage modification programs, including the Home Affordable Modification Program (HAMP) and the Standard Modification program. The “flex” in the program’s name echoes what the program is intended to do: allow lenders greater flexibility in modifying mortgages for eligible borrowers.
WHY
Flex Modification
Generally, mortgage modifications are intended to help homeowners avoid foreclosure and the Flex Modification program is no different. Foreclosure is problematic for borrowers because it means losing the home they’ve invested money in and it can damage their credit scores. Lenders prefer to avoid foreclosure because it usually means a financial loss on the loan.
A Flex Modification can help to avoid that scenario by:
- Bringing loans current
- Potentially reducing the mortgage payment for the loan
- Adding past due amounts to the unpaid loan balance
- Extending the loan term up to 40 years, beginning from the date the modification is completed
- Reducing the interest rate on the loan
- Deferring some of the loan balance into a non-interest-bearing balance
The exact terms of a Flex Modification will depend on the borrower’s situation and the original loan terms. But overall, this program can make mortgage debt easier to manage for borrowers who may be experiencing an extended financial hardship.
CRITERIA OF
ELIGIBILITY
Here are some of the qualifications you’ll need to meet for a Flex Modification:
- Your mortgage must be at least 1 year old.
- You must have a first-lien mortgage, which means your mortgage company will be repaid first if you default on your loan and the home is sold.
- If your loan is current or you have fewer than 60 days of missed payments, the mortgage must be for your primary residence. You must be 60 days or more past due on a loan for a second home or investment property. The property may be vacant or condemned.
- Your mortgage loan is current or less than 60 days past due, but your lender has determined the loan is in “imminent default.” That means the lender believes you are no longer able to afford your monthly payment.
If you are seeking a Flex Modification due to financial hardship related to the pandemic, you’ll need to be able to document that your hardship is related to COVID-19 (for example, loss of employment or work hours due to quarantine or lockdown).