Freedom Mortgage Loan Modification: What Homeowners Need to Know in 2026

Freedom Mortgage Corporation is one of the largest mortgage companies in the United States — a major non-bank mortgage originator and servicer headquartered in Mount Laurel, New Jersey — with a portfolio heavily concentrated in FHA and VA government-backed loans and a significant role as a Ginnie Mae servicer. This concentration defines the most important characteristic of Freedom Mortgage for homeowners seeking modifications: the federal programs governing FHA and VA modifications carry specific mandatory evaluation requirements, specific tools, and specific oversight mechanisms that are materially more favorable to homeowners than conventional loan programs — but only when correctly invoked under the federal 12 C.F.R. § 1024.41 framework.

The most important of these tools — the 24 C.F.R. § 203.371 FHA partial claim — is one of the most powerful yet most underutilized loss mitigation instruments in the entire mortgage system. Freedom Mortgage is required by federal regulators to evaluate qualifying FHA borrowers for the partial claim under the 24 C.F.R. § 203.605 mandatory waterfall before issuing a modification denial or initiating foreclosure. Yet most Freedom Mortgage FHA borrowers in default never receive a partial claim evaluation. Many are denied modification without it being offered. Some enter foreclosure without ever knowing it existed. Professional help at Freedom Mortgage is, more than at any other servicer, about knowing these mandatory evaluation requirements exist and demanding they be fulfilled. A borrower can independently confirm the investor governing the loan through a 12 C.F.R. § 1024.36 written request for information, which Freedom Mortgage must respond to within statutory timelines.

Freedom Mortgage acquired RoundPoint Mortgage Servicing in 2023, absorbing additional servicing portfolio into the Freedom operation. Borrowers whose loans transferred from RoundPoint to Freedom in or after 2023 should verify that prior application history and forbearance agreements transferred accurately under the RESPA § 6 / 12 C.F.R. § 1024.33 servicer-transfer notice rules. A loss mitigation application that was in process with RoundPoint at the time of the transfer may not have moved cleanly into Freedom's system — and a Freedom Mortgage system that shows the file as incomplete is not protected by the 12 C.F.R. § 1024.41(g) dual tracking prohibition.

The 24 C.F.R. § 203.371 FHA Partial Claim: Freedom Mortgage's Most Critical Tool

The 24 C.F.R. § 203.371 FHA partial claim is a zero-interest subordinate lien that the federal government pays to the servicer on the borrower's behalf, bringing the delinquent first mortgage completely current. The partial claim amount covers all outstanding arrears, fees, and costs — structured as a subordinate lien owed only when the property is sold or the first mortgage is paid off. During the entire period between the partial claim and the eventual payoff, the borrower pays nothing on the partial claim and their regular monthly payment is unchanged from what it was before the delinquency.

For Freedom Mortgage FHA borrowers who accumulated arrears due to a temporary hardship but who can resume regular monthly payments, the § 203.371 partial claim is frequently the ideal resolution — not modification. The partial claim cures the delinquency and restores the loan to current status without modifying any loan terms. Federal guidelines require Freedom Mortgage to evaluate for the partial claim under the § 203.605 waterfall sequence specifically because it is often the better outcome for the borrower. Freedom Mortgage's failure to proactively offer this evaluation means many borrowers who qualify — and whose entire problem could be resolved without modification, without out-of-pocket payment, and without any change to their monthly payment — are instead put through modification reviews that deny them or worse.

The 24 C.F.R. § 203.605 Federal Loss Mitigation Waterfall: Freedom Mortgage's Mandatory Obligation

The 24 C.F.R. § 203.605 federal loss mitigation waterfall requires Freedom Mortgage to evaluate FHA borrowers for loss mitigation options in a specific sequence — preceded by the 24 C.F.R. § 203.604 face-to-face meeting requirement (or its functional equivalent for borrowers more than 50 miles from the servicer's office) — before any foreclosure action. This waterfall includes informal forbearance, formal forbearance, special forbearance, loan modification, and the 24 C.F.R. § 203.371 partial claim, evaluated in order. Freedom Mortgage cannot skip to a modification denial or proceed to foreclosure without completing this evaluation sequence. A Freedom Mortgage that issued a modification denial without evaluating the § 203.371 partial claim has not completed the federally mandated § 203.605 waterfall — meaning the denial is both incorrect and potentially in violation of Freedom Mortgage's FHA servicer obligations. Professional identification of this failure and specific demand for complete § 203.605 waterfall evaluation is one of the most impactful interventions available for Freedom Mortgage FHA borrowers.

The 12 C.F.R. § 1024.41 federal Regulation X framework provides the overlay that governs all loss mitigation processing — including § 203.605 waterfall evaluations — at Freedom Mortgage. Under 12 C.F.R. § 1024.41(b)(2)(i)(B), a complete application is the trigger for both the § 1024.41(c) 30-day evaluation window and the § 1024.41(g) dual tracking protection. 12 C.F.R. § 1024.41(d) requires Freedom Mortgage to provide specific written reasons for any denial. 12 C.F.R. § 1024.41(h) creates the 14-day appeal window for the denial. 12 C.F.R. § 1024.39 early intervention obligations (live contact by day 36 of delinquency, written loss mitigation notice by day 45) require Freedom Mortgage to communicate the availability of loss mitigation but do not by themselves trigger the protections — only a complete application does. And 12 C.F.R. § 1024.41(f) prohibits the first foreclosure filing until day 120, giving the borrower a pre-filing window in which to assemble and submit the complete application that activates the protections.

Freedom Mortgage VA Loans Under 38 C.F.R. § 36.4350 et seq.: Institutional Oversight Available

Freedom Mortgage is also a significant VA lender and servicer. VA loans carry servicer obligations under 38 C.F.R. § 36.4350 et seq. that extend beyond conventional loan requirements. Freedom Mortgage must exhaust all reasonable means of avoiding foreclosure before proceeding against a VA-guaranteed loan. The VA regional loan center can intervene directly under 38 C.F.R. § 36.4350 et seq. authority when Freedom Mortgage is not meeting its VA servicing obligations — contacting Freedom Mortgage, reviewing its loss mitigation compliance file, and requiring corrective action. This institutional advocacy is available to any veteran with a Freedom Mortgage VA loan in default. Most veterans never invoke it because they do not know it exists. Professional knowledge of how to invoke VA regional loan center oversight for Freedom Mortgage VA borrowers is an important tool that changes how Freedom Mortgage responds.

The VA regulatory framework is currently in transition. The VA Servicing Purchase (VASP) program — which had allowed the VA to acquire delinquent loans and modify them at a fixed 2.5% interest rate — was terminated on May 1, 2025. On July 30, 2025, President Trump signed the VA Home Loan Program Reform Act (H.R. 1815) into law, creating a permanent VA partial claim program modeled on the FHA partial claim. As of 2026, however, the new VA partial claim program is signed into law but not yet fully operational — the VA continues finalizing implementation rules. Veterans with loans serviced by Freedom Mortgage currently rely on standard VA loss mitigation tools under 38 C.F.R. § 36.4350 et seq. plus VA regional loan center oversight, which makes the regional loan center intervention channel especially important for VA borrowers in 2026.

Freedom Mortgage Conventional Loans: Fannie Mae Servicing Guide D2-3.2 and Freddie Mac Servicing Guide Chapter 9203

For Fannie Mae conventional loans serviced by Freedom Mortgage, the Flex Modification under Fannie Mae Servicing Guide D2-3.2 applies — targeting approximately 20% monthly payment reduction through interest rate reduction, term extension to 480 months, and principal forbearance where applicable. For Freddie Mac conventional loans, the parallel Flex Modification under Freddie Mac Servicing Guide Chapter 9203 applies. Both calculations follow standardized GSE guidelines that Freedom Mortgage must apply correctly under the 12 C.F.R. § 1024.41 framework. Professional review of Freedom Mortgage's Flex Modification offer identifies errors in the benchmark rate used, the term applied, the income figure, or the principal forbearance calculation — all correctable through the 12 C.F.R. § 1024.41(h) 14-day appeal process within the required window.

The Freedom Mortgage Application Process Under 12 C.F.R. § 1024.41

Freedom Mortgage's modification application requires: the completed borrower assistance form; the two most recent pay stubs; the two most recent years of federal tax returns; the two to three most recent months of complete bank statements (every page); a signed and dated hardship letter; monthly income and expense documentation; and all additional income documentation. For FHA borrowers, the application must specifically demand evaluation for all 24 C.F.R. § 203.605 waterfall loss mitigation options including the 24 C.F.R. § 203.371 partial claim — in writing, creating a documented record that federal guidelines require Freedom Mortgage to respond to. Professional preparation of the Freedom Mortgage application includes this FHA-specific demand and ensures every document meets the 12 C.F.R. § 1024.41(b)(2)(i)(B) completeness requirements so § 1024.41(g) dual tracking protections trigger on the first submission.

Common Freedom Mortgage Denial Reasons

FHA partial claim not evaluated: Freedom Mortgage denied modification without evaluating the 24 C.F.R. § 203.371 partial claim as required by the 24 C.F.R. § 203.605 federal loss mitigation waterfall. Professional demand for correct federal evaluation is the response — this is a regulatory compliance demand, not just a 12 C.F.R. § 1024.41(h) modification appeal, and it carries different weight.

Income insufficient for modified payment: For FHA borrowers, the first response is demand for § 203.371 partial claim evaluation — because the partial claim may resolve the delinquency without any modification, making the income-to-payment ratio question irrelevant. For non-FHA borrowers, if income was incorrectly calculated, the determination may be wrong and challengeable under the § 1024.41(h) appeal process.

NPV test negative: Freedom Mortgage's net present value analysis determined foreclosure produces more investor value. NPV inputs are commonly miscalculated. For FHA loans, NPV tests must follow the prescribed federal methodology — if they did not, the test result may be invalid.

VA loss mitigation not exhausted: For VA borrowers, Freedom Mortgage denied modification without exhausting all reasonable means under 38 C.F.R. § 36.4350 et seq. VA regional loan center intervention is the appropriate response.

Incomplete application: Resubmitting immediately with a complete package under 12 C.F.R. § 1024.41(b)(2)(i)(B) resolves this.

Freedom Mortgage Escalation Tools

When Freedom Mortgage's standard loss mitigation process stalls or produces an incorrect result, professional escalation tools create accountability. For FHA loans, federal regulatory oversight mechanisms and formal federal regulators waterfall compliance demands create regulatory pressure that changes how Freedom Mortgage responds. For VA loans, VA regional loan center intervention provides institutional advocacy. CFPB complaints against Freedom Mortgage create formal records with mandatory response timelines. These escalation tools — deployed correctly and with the right documentation — produce results that informal phone calls cannot.