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304 North Cardinal St.
Dorchester Center, MA 02124
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If you’re facing financial hardship and struggling to make your monthly mortgage payment, a mortgage modification may make your home loan more affordable and help you avoid foreclosure. Loan modifications date as far back as the 1930s, when they helped stabilize the housing market during the Great Depression by making mortgages more manageable for homeowners.
You may receive some of the same benefits today by working with your lenders to get a loan modification to regain control of your mortgage payments and prevent foreclosure. One well-known modification is the Fannie Mae and Freddie Mac Flex Modification program, which allows you to modify your mortgage if you face financial hardship. Here’s how it works.
The Flex Modification program is offered jointly by Fannie Mae and Freddie Mac, two government-sponsored agencies that purchase and guarantee loans that meet specific standards. The program replaces the Home Affordable Modification Program (HAMP) and the agencies’ previous “Standard” and “Streamlined” modification programs.
The Flex Modification program generally aims to reduce your monthly mortgage obligation by roughly 20% through various means, such as:
If you qualify, many lenders are willing to modify your loan because it often requires less time and money than foreclosure.
To qualify for the Flex Modification program, you must meet several criteria, such as:
Even if you don’t meet all of the eligibility requirements, it’s crucial to proactively contact your lender to determine your options before it’s too late. For example, if you have a government-backed loan, such as an FHA or VA loan, instead of a conventional one, you may instead qualify for a modification program from the agency that backs your loan.
Once you’ve verified Fannie Mae or Freddie Mac back your loan, contact your loan servicer to discuss their process and learn what documents you must provide. Also, ask your servicer what other loan assistance programs are available to you.
If you’re facing foreclosure, you must submit your application at least 37 days before the planned foreclosure sale. Federal law mandates a delay in foreclosure while your application is under review.
If you’re current on your loan or less than 90 days delinquent, you must complete a Borrower Response Package (BRP). Borrowers who are delinquent for more than 90 days aren’t required to submit a BRP.
Your loan servicer may offer you a Flex Modification even if you don’t apply for one. Fannie Mae and Freddie Mac require their servicers to review you for a loan modification if you’re 90 to 105 days late with your payments.
To qualify for a Fannie Mae and Freddie Mac Flex Modification, you must complete a three- or four-month trial period to demonstrate you can make your monthly payments on time. If you do, you could receive a permanent loan modification with a more affordable payment. Additionally, your lender may waive your past late charges and other fees.
If you’re struggling to afford your mortgage payments but don’t qualify for flex modification, you may still have options, such as:
If you’re approved for a loan modification, make sure you understand the impact it will have on your monthly payments and the total amount you’ll owe immediately and in the long term.
One of the most empowering ways to get through tough times is to have a clear picture of your finances and make intelligent decisions that help you get back on your feet. Remember to keep track of your credit to help keep it in good standing. Consider free credit monitoring from Experian, which can show you what factors influence your credit and how you can improve it even when your budget is under strain.
For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team is here to help you navigate your options and find the best solution for your financial situation.
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