Fannie Mae Flex Modification Lender Letter LL-2016-06

Sep 17, 2026

Upload by Oliver

Lender Letter LL-2016-06 outlines Fannie Mae Flex Modification requirements for all Fannie Mae single-family servicers, replacing Standard and Streamlined Modifications effective on stated dates. It describes borrower eligibility and BRP submission rules based on delinquency duration, implementation timelines, and updates to the Servicing Guide. The letter details documentation, workout option evaluation, property valuation, escrow analysis, HTI ratio calculation, trial period and offer processes, loan agreement execution and recording, post-modification account adjustments, treatment with mortgage insurance, and handling of fees, late charges, and incentive fees.

LanguageEnglish

CategoryLetters

FormatPDF

Pages15

Reading Time5 min

AccessFree to download

Fannie Mae Flex Modification Overview

Effective date and implementation timeline

Document updates to the Servicing Guide

Key Requirements and Procedures

Documentation requirements and BRP submission rules

Eligibility criteria for Flex Modification

Eligibility for Texas Section 50(a)(6) mortgage loans

Property valuation and escrow analysis

Determining Flex Modification terms

Calculating the Housing Expense-to-Income (HTI) Ratio

Trial period plan and completing the Flex Modification

Soliciting borrowers

Handling a complete Borrower Response Package

Preparing, executing, and recording the loan modification agreement

Post-modification account adjustments

Processing with mortgage insurance

Fees, late charges, and incentive fees

Post-disaster related changes

Lender Letter LL-2016-06 December 14, 2016 * To: All Fannie Mae Single-Family Servicers *reposted December 15, 2016 Fannie Mae Flex Modification Fannie Mae is introducing a new mortgage loan modification jointly developed with Freddie Mac at the direction of the Federal Housing Finance Agency. The Fannie Mae Flex Modification combines features of the Fannie Mae HAMP, Standard Modification, and Streamlined Modification, and is intended to replace Standard and Streamlined Modifications as of the effective date provided below. The Fannie Mae Flex Modification can be applied to all mortgage loan delinquencies, and to mortgage loans that are determined to be in imminent default in accordance with the Servicing Guide. Borrowers with mortgage loans less than 90 days delinquent must submit a complete Borrower Response Package (BRP) in accordance with this Lender Letter, and will be evaluated for a Fannie Mae Flex Modification which will target a 20% payment reduction and a 40% Housing Expense-to-Income (HTI) Ratio. Borrowers with mortgage loans 90 or more days delinquent are not required to submit a BRP and will be evaluated for a Fannie Mae Flex Modification which will target a 20% payment reduction. Effective Date The servicer is encouraged to implement the policies in this Lender Letter as early as March 1, 2017; however, the servicer must begin evaluating borrowers for the Fannie Mae Flex Modification no later than October 1, 2017. Once implemented, the servicer must offer the Fannie Mae Flex Modification to all eligible borrowers according to the requirements in this Lender Letter and not evaluate borrowers for a Fannie Mae Standard or Streamlined Modification. Date of Servicing Guide Update The policy changes in this Lender Letter will be reflected in the October 2017 update of the Servicing Guide. This Lender Letter covers the following requirements for the Fannie Mae Flex Modification: 􀂃 Documentation Requirements 􀂃 Determining Eligibility for a Fannie Mae Flex Modification 􀂃 Determining Eligibility for a Fannie Mae Flex Modification for a Texas Section 50(a)(6) Mortgage Loan 􀂃 Obtaining a Property Valuation 􀂃 Performing an Escrow Analysis 􀂃 Determining the Fannie Mae Flex Modification Terms 􀂃 Calculating the Housing Expense-to-Income Ratio 􀂃 Offering a Trial Period Plan and Completing a Fannie Mae Flex Modification 􀂃 Soliciting the Borrower for a Fannie Mae Flex Modification 􀂃 Handling a Complete Borrower Response Package 􀂃 Preparing the Loan Modification Agreement 􀂃 Executing and Recording the Loan Modification Agreement 􀂃 Adjusting the Mortgage Loan Account-Post Mortgage Loan Modification 􀂃 Processing a Fannie Mae Flex Modification for a Mortgage Loan with Mortgage Insurance 􀂃 Handling Fees and Late Charges in Connection with a Fannie Mae Flex Modification 􀂃 Incentive Fees 􀂃 Changes to Fannie Mae Streamlined Modification Post Disaster Forbearance and Fannie Mae Cap and Extend Modification for Disaster Relief The italicized and underlined topics above have not been altered from policy within the Fannie Mae Servicing Guide as of the date of this Lender Letter. If there are changes to these topics after the date of this Lender Letter, the updated guidance will supersede the existing requirements. Documentation Requirements If the mortgage loan is current or less than 90 days delinquent, the borrower must submit a complete BRP except as described below. If the borrower submitted a complete BRP prior to the 90th day of delinquency, the servicer must use the information from the Uniform Borrower Assistance Form ( Form 710), or equivalent, to determine borrower’s hardship, total assets and income, and the servicer must evaluate the borrower for all workout options in accordance with Servicing Guide D2-3.1- 01 , Determining the Appropriate Workout Option, including the Fannie Mae Flex Modification. If the mortgage loan is 90 or more days delinquent, a complete BRP is not

FAQs

What is the purpose of the Fannie Mae Flex Modification in this lender letter?

The letter introduces the Fannie Mae Flex Modification, combining features from the HAMP, Standard, and Streamlined modifications, and intends it to replace Standard and Streamlined Modifications as of the effective date.

Which borrowers must submit a Borrower Response Package (BRP)?

Borrowers with mortgage loans less than 90 days delinquent must submit a complete BRP. Borrowers with 90 or more days delinquent are not required to submit a BRP, subject to described exceptions.

What delinquency period and payment/HTI targets does the letter use when evaluating borrowers?

For borrowers under 90 days delinquent, evaluation targets a 20% payment reduction and a 40% Housing Expense-to-Income (HTI) Ratio. For borrowers 90 or more days delinquent, evaluation targets a 20% payment reduction.

Sep 17, 2026

Upload by Oliver