Disaster Relief Options for Mortgages

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disaster recoveryIn the wake of the recent catastrophic hurricanes and wildfires that have ravaged parts of our country, the President declared several Major Disaster Areas. This designation brings with it a commitment of federal aid to assist in recovery. A list of these areas can be found at www.fema.gov/disasters. What does this mean for people who are paying a mortgage on a property or running a business in a Major Disaster area? What about people employed in one of these areas? Depending upon what type of mortgage you have and which government-sponsored enterprise (GSE) owns or guarantees your mortgage, you may be eligible for various types of relief to help ease the financial burdens of disaster recovery.

Where To Turn For Help

• Contact your mortgage servicer (the company to which you send your monthly mortgage payment) immediately to find out if you are eligible for assistance. Also inquire about possible mortgage modification.

• Visit your Local Assistance Center (LAC). This facility is staffed by local, state, and federal agencies where you can access available disaster assistance programs and services. Victims of the California wildfires can access a list of LACs via California Governor’s Office of Emergency Services. 

• Contact your Local Tax Assessor to request that your taxes be lowered while you rebuild.

More Details About Mortgage Relief:

Freddie Mac mortgage relief options for affected borrowers in Major Disaster Areas include:
• Suspending foreclosures by providing forbearance for up to 12 months;
• Waiving assessments of penalties or late fees against borrowers with disaster-damaged homes; and
• Not reporting forbearance or delinquencies caused by the disaster to the nation’s credit bureaus.
• Borrowers who work in eligible disaster areas but have homes in unaffected areas may be considered for Freddie Mac’s standard relief policies, which include forbearance or mortgage modifications

Fannie Mae mortgage relief options for affected borrowers in Major Disaster areas include:
• A forbearance to temporarily suspend or reduce mortgage payments for up to 12 months
• No late charges for missed payments
• No reporting of missed payments to credit bureaus while payments are suspended
• A loan modification to avoid a burdensome repayment or higher monthly payments after a forbearance
• Possible suspension of legal proceedings (i.e., foreclosure)

FHA mortgage relief options for affected borrowers in Major Disaster areas include:
• During the term of a moratorium, your loan may not be referred to foreclosure if you were affected by a disaster
• Your lender will evaluate you for any available loss mitigation assistance to help you retain your home
• Your lender may enter into a forbearance plan, or execute a loan modification or a partial claim, if these actions will help retain and pay for your home
• If saving your home is not feasible, lenders have some flexibility in using the pre-foreclosure sales program or may offer to accept a deed-in-lieu of foreclosure

By Amy Malloy

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