loan modification.
9. FLEX MODIFICATION PROGRAM
Another option if you are facing a foreclosure is to modify the terms of your loan to reduce your monthly payments. While you may be able to get a proprietary loan modification through your lender, you also may be eligible for the Flex Modification program if Fannie Mae or Freddie Mac owns your loan. This program is the successor to the Home Affordable Modification Program (HAMP), which expired recently. Flex Modification is estimated to reduce mortgage payments by 20 percent. Fannie Mae and Freddie Mac are government-sponsored enterprises that participate in the secondary mortgage market. This means that they buy a mortgage from the original lender and group it with other mortgages to sell to investors as mortgage-backed securities. Investors find these securities attractive because Fannie Mae and Freddie Mac often guarantee that investors will be paid even if the homeowner defaults on the mortgage.
REQUIREMENTS FOR A FLEX MODIFICATION
You can check the websites of Fannie Mae and Freddie Mac to find out if either entity owns your loan. If it does, you may be eligible as long as certain criteria are satisfied. For example, the Flex Modification program is available only for a first mortgage. You cannot use it if you have refinanced your home with additional mortgages. At least a year must have passed after the homeowner obtained the mortgage before they apply for Flex Modification. These are just some of the criteria, which are technical and detailed. Your mortgage servicer can advise you on whether you are eligible.
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