FHA, VA, Fannie Mae, and Freddie Mac all currently offer updated Loan Modification Programs in 2025. FHA focuses on extended COVID-19 recovery options and permanent loss mitigation; VA has just enacted the VA Home Loan Program Reform Act with new foreclosure-prevention tools; Fannie Mae and Freddie Mac both rely on their Flex Modification programs, targeting a 20% payment reduction, with recent updates to credit score rules and potential assumable/portable loan structures.

FHA Loan Modifications (2025)

·       COVID-19 Recovery Options
Extended: FHA extended temporary recovery options until February
1, 2026, allowing servicers to continue using partial claims and
streamlined modifications.

·       Permanent Loss Mitigation
Updates: FHA revised its Handbook 4000.1 to incorporate
lessons from pandemic-era policies, including clearer rules for forbearance,
claims, and modifications.

·       24-Month Limit:
Borrowers are limited to permanent loss mitigation solutions within a 24-month
window.

·       Tools Available:

o      Loan modifications (rate/term
adjustments, re-amortization)

o      Partial claims (HUD advances funds
to cover arrears, added to loan balance)

o      Forbearance extensions

For FHA Loan Modifications click on Foreclosure Help

VA Loan Modifications (2025)

·       VA Home Loan Program
Reform Act (H.R. 1815): Became law in July 2025,
reintroducing foreclosure-prevention tools.

·       New Options:

o      Partial Claims Program
Restored: Allows arrears to be covered and added to the loan balance.

o      Reduced Interest Rate
Modifications: Eligible veterans may receive modifications at 2.5%
interest.

o      40-Year Loan Modification
Option: VA Circular 26-24-8 authorized extensions up to 480
months.

·       VASP Program Ended:
The Veterans Affairs Servicing Purchase program was terminated, replaced by these new tools.

See if you qualify for a VA Loan Modification

Fannie Mae Loan Modifications (2025)

·       Flex Modification Program:

o      Designed for borrowers with
long-term hardship.

o      Targets a 20% reduction in
principal & interest payments.

o      Steps include capitalizing
arrears, adjusting interest rates, extending terms, and principal forbearance.

·       Recent Updates:

o      Credit Score Requirement
Removed: As of Nov 16, 2025, Fannie Mae eliminated
the 620 minimum credit score for DU loans.

o      Exploring
Assumable/Portable Loans: Potential future option to transfer
mortgages between buyers or properties.

Contact UCMA for Foreclosure Prevention Help

Freddie Mac Loan Modifications (2025)

·       Flex Modification Program:
Mirrors Fannie Mae’s approach, also targeting a 20% payment reduction.

·       Recent Updates:

o      April 2025 Guide Bulletin
clarified terms and servicer instructions.

o      Expanded eligibility for principal
forbearance when loan-to-value exceeds 50%.

o      Exploring assumable and
portable loan structures alongside Fannie Mae

Stopping Foreclosure on Freddie Mac Loans

  Comparison Table

Key Takeaway:

·       FHA is still bridging pandemic-era policies with permanent rules.

·       VA just modernized its foreclosure-prevention toolkit with lower-rate mods and long-term extensions.

·       Fannie Mae & Freddie Mac remain aligned under Flex Modifications, but are innovating with credit score flexibility and potential assumable/portable mortgage