Compliance Calendar

At Freddie Mac, we recognize that some Borrowers may experience financial hardships that result in a permanent or long-term decrease in income or an increase in expenses that may impact their ability to make their Mortgage payments. We are pleased to announce updates to the Freddie Mac Flex Modification. We are implementing updates to this solution jointly with Fannie Mae and at the direction of FHFA with a goal of expanding the eligible population while achieving more equitable payment relief outcomes. The steps to determining the terms of the Freddie Mac Flex Modification have been reordered and will be incrementally applied until a 20% Principal and Interest Payment reduction target has been achieved or the steps have been exhausted.

This Bulletin describes the updated requirements for the Freddie Mac Flex Modification, primarily as they relate to determining the terms of a Freddie Mac Flex Modification. All other Freddie Mac Flex Modification requirements not addressed by this Bulletin remain unchanged. In our next scheduled Servicing Bulletin, we will publish the corresponding Guide updates to reflect the changes announced today.

We remain committed to ensuring our retention workout options provide appropriate borrower assistance regardless of the economic environment. Accordingly, we are updating the steps for determining the Fannie Mae Flex Modification terms in alignment with Freddie Mac and at the direction of FHFA. The updates expand eligibility by revising the mark-to-market loan-to-value (MTMLTV) based requirements and provide more equitable payment reduction to eligible borrowers by applying the terms incrementally and targeting a 20% P&I payment reduction. In accordance with these policy updates, we are also publishing revised Evaluation Notices that must be implemented as of the effective date below.

This Lender Letter contains

▪ Updates to the Fannie Mae Flex Modification terms

▪ Appendix With the exception of the updates in this Lender Letter that replace the referenced Guide policy, the servicer must otherwise refer to the existing requirements in Servicing Guide D2-3.2-06, Fannie Mae Flex Modification and F-1-27, Processing a Fannie Mae Flex Modification for evaluating, processing, and completing a Fannie Mae Flex Modification. Additionally, when we update the Servicing Guide with the revised steps, we will replace the term “interim month” with “processing month” in relation to a Fannie Mae Flex Modification to align the terminology with that used for payment deferral.

Effective: As early as Nov. 1, 2024, but no later than Dec. 1, 2024, servicers must determine the borrower’s new modified mortgage loan terms for a Fannie Mae Flex Modification in accordance with this Lender Letter. Once implemented, the servicer must offer the Fannie Mae Flex Modification to all eligible borrowers according to the requirements in this Lender Letter. These policy changes will be reflected in the November 2024 Servicing Guide update.