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October 31st, 2012 (Modified on November 8th, 2012)

Fannie, Freddie offer mortgage relief to Hurricane Sandy’s victims

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hurricaneIn the wake of Hurricane Sandy, Fannie Mae and Freddie Mac have reached out to their servicers, urging them to adopt mortgage-relief policies for homeowners severely impacted by Hurricane Sandy.

Read: How will Hurricane Sandy affect your home insurance?

HUD announces Hurricane Sandy relief

“Freddie Mac has authorized the nation’s mortgage servicers to provide a full range of mortgage relief options to affected borrowers with mortgages owned or guaranteed by Freddie Mac,” said Tracy Mooney, Senior Vice President of Single-Family Servicing and Real Estate Owned at Freddie Mac. “Forbearance on mortgage payments for up to one year is one of several options our servicers have been instructed to offer borrowers on a case-by-case basis.”

Freddie also offers the following assistance options to borrowers affected by disasters:

  • Foreclosure and eviction suspensions for up to one year
  • Waiving the assessments of penalties or late fees for those with homes damaged by the storm
  • If Sandy has triggered a delinquency, it will not be reported to the three credit bureaus

The unfortunate aspect concerning this assistance is that Fannie and Freddie can only “strongly encourage” or “urge” servicers to take action. As Freddie explained, each decision of assistance will be made on a case-by-case basis by the servicer.

As for any announced Fannie Mae relief, Margaret Chadbourn of Reuters reports that, “Fannie Mae said its policy with mortgage servicers, updated in 2009, allows borrowers to enter forbearance for up to 90-days. Fannie Mae said servicers were reminded of the existing guidelines on disaster relief in light of the recent storm.”

Do you have to pay your mortgage if your house is destroyed?

A disaster does not guarantee mortgage relief, according to Laura Vinton, counseling manager at Hope Enterprise Corp., a nonprofit community development financial institution in Gulfport, Miss., a town devastated by Hurricane Katrina in 2005. “Any consideration is determined case-by-case, and it’s a two-way process,” she said.

Borrowers should contact their lender as soon as possible after a disaster. “It’s that customer call that triggers all the actions that take place on our side,” explained Karol Mason, business process quality manager at Wells Fargo Home Mortgage.

Vinton offers some good tips for borrowers to follow after 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

For more information on how lenders and servicers treat your home loan following a disaster, be sure to read “Do you have to pay your mortgage if your house is destroyed?” in its entirety.

Marcie Geffner contributed to this post.

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One Response to “Fannie, Freddie offer mortgage relief to Hurricane Sandy’s victims”

  1. Fannie, Freddie, & HUD to Provide Relief to Hurricane Sandy Victims at 360 Mortgage Group Says: November 1st, 2012 at 3:53 pm

    [...] HSH blog contributor Tim Manni points out, it’s important to note that Fannie and Freddie are only [...]

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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 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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