Fannie Mae Updates Flex Modification and Foreclosure Suspension Policy Related to COVID-19 Pandemic

June 30, 2021

Today, Fannie Mae updated its Lender Letter LL-2021-07, Flex Modification for COVID-19 Impacted Borrowers, and Lender Letter LL-2021-02, Impact of COVID-19 on Servicing, communicating to its single-family servicers updates related to the COVID-19 pandemic.


In an effort to provide an interest rate reduction to borrowers who have experienced a COVID-19-related hardship, we are removing the post-modification MTMLTV threshold, regardless of the mortgage loan’s MTMLTV, related to setting the modification interest rate when determining the new modified terms for a Fannie Mae Flex Modification that satisfies the reduced eligibility criteria. Servicers are encouraged to implement this policy change immediately, but must implement it no later than August 31, 2021


As previously announced, Fannie Mae extended the suspension of foreclosure-related activities until July 31, 2021. The Consumer Financial Protection Bureau (CFPB) issued a final rule effective August 31, 2021 titled “Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act” (the “Final Rule”). During the period between the end of Fannie Mae’s suspension of foreclosure activities (July 31) and the effective date of the Final Rule (August 31), servicers must not take any action that would violate the Final Rule if it were in effect during that period.

For questions, please contact the Fannie Mae Investor Help Line at 1-800-232-6643, Option 3 or by e-mail.