Fannie Mae, Freddie Mac Extend Disaster Relief for Louisiana Flooding
Fannie Mae and Freddie Mac said they have extended disaster relief options for eligible borrowers affected by current flooding conditions in Louisiana.
More than 40,000 homes have been damaged in flooding resulting from unusually heavy rains in Louisiana since last weekend. Eleven people have been killed and 30,000 people have been rescued, with more than 8,000 in shelters. Both Louisiana Gov. John Bel Edwards (D) and President Barack Obama have declared the affected areas as disaster areas.
Freddie Mac said its disaster relief policies are available to borrowers with homes in presidentially declared Major Disaster Areas where federal Individual Assistance programs are being made available to affected individuals and households.
“Freddie Mac strongly encourages borrowers whose homes or businesses were harmed by the floods to immediately call their mortgage servicer to discuss mortgage relief,” said Yvette Gilmore, Freddie Mac Vice President of Single-Family Servicer Performance Management. “If their mortgage is owned or guaranteed by Freddie Mac, they may qualify for our full range of options, which includes forbearance on mortgage payments for up to one year.”
“We know that many people have had their lives disrupted by the flooding in Louisiana,” said Malloy Evans, Vice President of Servicing at Fannie Mae. “Our servicers are committed to helping homeowners affected by natural disasters and we are grateful for their efforts to offer the appropriate assistance to families in need. Our thoughts are with all of those who have been impacted.”
Under Freddie Mac disaster relief guidelines, mortgage servicers can suspend foreclosures by providing forbearance for up to 12 months; waive assessments of penalties or late fees against borrowers with disaster-damaged homes; and not report forbearance or delinquencies caused by the disaster to the nation’s credit bureaus. Affected borrowers should immediately contact their mortgage servicer
Under Fannie Mae’s guidelines for single-family mortgages, servicers have the ability to grant an initial period of forbearance to any borrower they believe has been affected by this natural disaster. Additional forbearance is available with approval from Fannie Mae. In addition, Fannie Mae guidelines authorize servicers to delay foreclosure sales and other legal proceedings in these areas.
A servicer may temporarily suspend or reduce a homeowner’s mortgage payments for up to 90 days if the servicer believes a natural disaster has adversely affected the value or habitability of the property or if the natural disaster has temporarily impacted the homeowner’s ability to make payments on their mortgage. Since these events can make it difficult to reach homeowners, Fannie Mae allows servicers to grant this temporary relief even if they cannot contact the impacted homeowner immediately. If a servicer establishes contact with a homeowner, the servicer may offer forbearance for up to six months, which may be extended for an additional six months, for those homeowners that were current or ninety days or less delinquent when the disaster occurred.
In addition, lenders who are originating loans that will be sold to Fannie Mae are reminded that they must verify the condition of the property if it is in the area affected by flooding.
