Hola,
I wanted to share some exciting updates about Fannie Mae and Freddie Mac’s loan modification programs. These changes could make a big difference for many borrowers.
Key Changes:
- Eligibility for Deferred Amounts: Borrowers with a Loan to Value (LTV) greater than 50% are now eligible for deferred amounts. This means that if you were previously denied a modification, you might now qualify. This could turn a denial into an approval!
- Retention of Current Contractual Rate: Borrowers can keep their current contractual interest rate if it is below the current modification rate of 6.5%. This applies to fixed-rate loans with an LTV greater than 50%. It’s a bit more complex for ARMs and Step Rate Mods, so we’ll save that for another time.
Example:
Let’s break this down with an example:
| Description | Amount |
| Modified Balance | $600,000 |
| Property Value | $1,000,000 |
| Loan to Value (LTV) | 60% |
| Eligible Deferred Amount | $100,000 |
| New Interest-Bearing Balance | $500,000 |
Calculation:
- LTV: $600,000 (Modified Balance) / $1,000,000 (Property Value) = 60%
- Deferred Amount: Up to $100,000 of the Modified Balance can be deferred, resulting in a new interest-bearing balance of $500,000.
Mandatory Implementation required by 12/01/2024. Under current guidelines, borrowers rarely received deferred amounts when their LTVs were between 80% and 100%.
Click below for supporting information:
FHFA Announces Enhancements to Flex Modification for Borrowers Facing Financial Hardship
Eligibility Requirements for a Freddie Mac Flex Modification
Other Modification Conditions and Requirements
Determining the terms of a Freddie Mac Flex Modification Effective 11/1/24
Other Modification Conditions and Requirements Effective 12/1/24
Eligibility Requirements for a Freddie Mac Flex Modification Effective 12/1/24
Determining the terms of a Freddie Mac Flex Modification Effective 12/1/24
