Options for Disaster Mortgage Relief

Homeowners who have been adversely affected by Hurricane Sandy may be able to qualify for mortgage relief from Fannie Mae and Freddie Mac.

Both mortgage guarantors have announced that homeowners in jurisdictions that have been declared major disaster areas may be able to have their mortgage payments temporarily suspended if their home was damaged by this week’s storm.

"We understand the disruption that a storm such as Sandy can have on people’s lives, and we’ve made it easy for our servicers to offer relief to those who need it," said Leslie Peeler, a Fannie Mae spokesperson. "Servicers are on the front lines with homeowners and we are grateful for their efforts to help borrowers. Our thoughts and prayers are with all of those who have been affected by the storm."

Mortgage payments may be suspended

Homeowners with Fannie Mae mortgages can have their mortgage payments suspended for up to 90 days if their home was damaged by the storm or if the disaster has temporarily affected their ability to make mortgage payments.

Freddie Mac allows up to 12 months’ forbearance for homeowners whose property has been damaged, along with waiving penalties or late fees against such borrowers and not reporting missed payments to the nation’s credit bureaus.

In either event, affected homeowners should begin the process of seeking a forbearance by contacting their mortgage servicer.

Disaster policies for FHA, VA mortgages

Homeowners with an FHA mortgage who live in one of the declared disaster areas and suffered damage from the storm may be shielded against foreclosure actions for a period of 90 days. The FHA does not provide special assistance for disaster-affected borrowers who are current on their loans, but does recommend that homeowners who are having difficulty making their mortgage payments as a result of the disaster contact their mortgage servicers to inquire about a possible forbearance or loan modification.

Homeowners with a VA mortgage are not excused from making their mortgage payments in the event of a disaster, even if the property is not habitable. However, they may be able to make arrangements for a forbearance or loan modification directly through their lender.

In addition, homeowners with damaged properties may be able to obtain disaster assistance through FEMA, the Federal Emergency Management Agency. However, demand is high in the wake of a disaster and funds for assistance may be limited, so homeowners are urged to apply as quickly as possible following a disaster.

First published at: http://www.mortgageloan.com/options-disaster-mortgage-relief-9280