Fannie Mae and Freddie Mac will replace the expiring Home Affordable Mortgage Program with a new loss mitigation option called the Flex Modification.

The new program is expected to provide a 20% payment reduction for eligible borrowers, the government-sponsored enterprises said Wednesday. Fannie and Freddie said that "a high percentage" of borrowers who are at least 60 days delinquent on their mortgages would be eligible; in certain cases, those who are less than 60 days delinquent or even current on their loans could also qualify.

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