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June 11th, 2011

A natural disaster destroyed my home…What do I do?

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iStock_000000736395SmallBetween the massive flooding, the devastating tornadoes and the wildfires, natural disasters have taken an extreme toll on American homes so far this year, and we’re only halfway through 2011.

“Few states are immune to natural disasters,” writes HSH.com contributing writer Marcie Geffner, “and each event affects thousands of homeowners who are forced to cope with the physical and emotional damage, as well as the prospect of perhaps not being able to manage their mortgage payments.”

Unfortunately, natural disasters don’t guarantee mortgage relief.

It’s very important for homeowners to realize that it’s up to you to get in touch with your lender following a disaster. You wouldn’t believe the time we spent researching what mandatory mortgage relief is actually available for homeowners.

The closest we came to finding guaranteed mortgage relief was this:

The Federal Housing Administration traditionally imposes a 90-day moratorium on foreclosures of FHA-insured loans in a disaster area. This freeze, triggered by an official declaration by the current president at the time of the disaster, gives the homeowner “a little more time” to work with the lender and insurance carrier to assess the damage and understand the situation, says Karol Mason, business process quality manager at Wells Fargo Home Mortgage.

In a Freddie Mac press release following the tornadoes which destroyed parts of the Midwest, Freddie outlined several ways in which lenders and servicers can provide mortgage relief, but the language of the release said Freddie can only “strongly encourage servicers to help affected borrowers with Freddie Mac-owned loans by”:

  • Suspending foreclosure and eviction proceedings for up to 12 months
  • Waiving assessments of penalties or late fees against borrowers with disaster-damaged homes
  • Not reporting forbearance or delinquencies caused by the disaster to the nation’s credit bureaus

Geffner talked to the experts and outlined several tips for homeowners when seeking mortgage relief following a disaster:

• Call your loan servicer as soon as possible

• Take good notes during the conversation

• Follow through on any documentation that is requested and keep copies

• Follow up and make sure agreed-upon accommodations are given as promised

• Contact a housing counseling agency approved by the U.S. Department of Housing and Urban Development for additional assistance

• Notify the credit bureaus that your house is located in a disaster area

Be sure to read Marcie Geffner’s article in full to learn about how your credit might be affected, what to do when relief runs out, and much, much more.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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