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12.3.5.2.4 The Freddie Mac Flex Modification in the Covid-19 context

Significant Law Change

Borrowers who cannot afford the current payment, do not accept a COVID-19 Deferral, or are otherwise ineligible to receive the deferral should be evaluated for a Freddie Mac Flex Modification. The Flex Modification seeks to provide payment relief to borrowers, and the method for calculating the financial terms of a Freddie Mac Flex Modification is discussed in § 7.3.1, supra.

Under Freddie Mac’s rules, borrowers facing COVID-19 related hardships will not have to satisfy particular Flex Modification eligibility requirements unless they were thirty-one days or more behind on their loans as of March 1, 2020, or the loan is less than ninety days behind on payments (for non-step rate loans). Borrowers who fit either of those categories will be reviewed under standard Flex Modification guidelines.

Although not directly stated in the lender letters, the eligibility requirements that do not apply for borrowers experiencing a COVID-19 hardship include the requirement that the mortgage was originated more than twelve months from the time of evaluation, the requirement that the mortgage loan must not have been modified three or more times, the requirement that the borrower had not failed a Flex Modification Trial Plan within twelve months of review, and the requirement that the borrower must not have become sixty days behind within the first twelve months of a Flex Modification without reinstatement.84

For those borrows who cannot afford to keep their home through retention options, Freddie Mac also has their Short Sale and Mortgage Release options as described in § 7.5.5, supra.

Footnotes

  • 84 Compare Freddie Mac Bulletin 2020-15 (May 13, 2020), available at https://guide.freddiemac.com, with Freddie Mac Seller/Servicer Guide 9206.5, 9206.6.