Federal agencies, lenders expand mortgage relief to borrowers affected by recent disasters

by Broderick Perkins

(9/7/2012) - From Hurricane Isaac to the Oklahoma wildfires and other major disasters this year, federal mortgage insurers and private lenders are making an effort to assist borrowers whose lives have been disrupted by lost income, injury or death and or damage to or destruction of their homes.

The U.S. Department of Housing and Urban Development (HUD) says, for disaster-stricken households, lenders can waive late fees, allow you to put off making payments for some time and stop or delay foreclosure.

For example, if you have a conventional mortgage or Veterans Administration-insured (VA) loan and answer yes to four basic questions, you should contact your lender to determine what assistance is available to you.

1. Did my expense rise or income fall?
2. Were these changes in my finances caused directly or substantially by the disaster?
3. Have I missed any mortgage payments?
4. Am I without other resources, such as insurance settlements, to catch up?

For Federal Housing Administration-insured loans (FHA) a 90-day foreclosure moratorium is available if:

- You or your family live within the geographic boundaries of a Presidentially declared disaster area.
- You are a household member of someone who is deceased, missing or injured directly due to the disaster.
- Your financial ability to pay your mortgage debt was directly or substantially affected by a disaster.

Freddie Mac, Fannie Mae

Freddie Mac recently announced a menu of relief efforts - including no mortgage payments for a year - for those to areas declared a disaster by the President.

"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," Mooney said.

In addition to mortgage payment forbearance Freddie Mac is encouraging mortgage servicers helping those with disaster-related problems to:

- Suspend foreclosure and eviction proceedings for up to 12 months.
- Waive assessments of penalties or late fees against borrowers with disaster-damaged homes.
- Not report forbearance or delinquencies caused by the disaster to the nation's credit bureaus.

Fannie Mae, likewise, typically offers similar mortgage relief.

The Internal Revenue also offers tax relief for taxpaying disaster victims.

Contact your lender and tax professional for assistance.