CNN
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Wildfires, flash floods, tornadoes and hurricanes can destroy your home, but not your mortgage.
The harsh reality is that even when you live in a federally declared disaster area — like wildfire-ravaged Los Angeles County or hurricane-ravaged North Carolina and other states — you still Whatever is left over on the loan, you owe the bank. Even if your home no longer exists or is unoccupied.
However, there are some disaster relief programs that can temporarily reduce or suspend your mortgage payments for up to a year, and sometimes longer, depending on your circumstances.
Here’s what you need to know.
The servicer is listed on your mortgage statement and is the first place you should call to learn about your options, which usually include a form of foreclosure.
The types of mortgage relief that a servicer can provide will depend in part on the institution that backs your mortgage or holds it in its portfolio. Usually this is an individual bank or government agency (for example, Fannie MaeFreddie Mac, the Federal Housing Administration, the Veterans’ Administration, etc.
The specific eligibility rules for qualifying for forbearance may vary depending on which institution holds or backs your loan, but even if you were in default on your loan before the disaster, You may also be granted a forbearance. In Fannie Mae’s case, for example, servicers are expected to provide relief to borrowers in financial distress, even if it’s a disaster, said Janice Haight, the agency’s vice president of single-family credit risk. Why not be a criminal before. Policy
Typically, with a federally backed loan, you’ll likely be offered between three and 12 months of forbearance, during which your mortgage payments will be suspended or reduced.
During the forbearance period, you must not be subject to legal action such as late fees or foreclosure.
(For those affected by the Los Angeles wildfires, California Governor Gavin Newsom announced. Jan. 18 that the five major banks — Bank of America, Citi, JPMorgan Chase, US Bank and Wells Fargo — will automatically introduce a 90-day moratorium on mortgages that will not prevent further relief. (They will also offer at least 60 days of new foreclosure or eviction protection.)
If you don’t call your servicer right away: Check your loan servicer’s rules, but Fannie Mae also expects servicers to automatically hold for up to 90 days on loans it repays. will offer if they haven’t heard from the borrower but know. This person’s house is located in a presidential major disaster area.
During that 90-day period, though, borrowers should make it a priority to call their servicer to explain their situation and work out longer forbearance arrangements.
“It’s very important that the borrower reach out and stay in constant contact with the servicer,” Hight said.
You will still owe money for the months your payments were suspended or reduced. But you don’t necessarily have to pay these arrears in one lump sum when your tolerance runs out.
You may be able to make a new arrangement with your servicer to spread these repayments over a longer period of time.
“It all depends on the borrower’s facts and circumstances,” Hight said. For example, he explained, if you have a job and can make regular mortgage payments but need more time to pay off the arrears, you may be able to work. New deferment plan Or spread the amount you owe from a grace period over a certain number of months on top of your regular payments.
Or, if you’re still struggling financially and can’t even manage to make your regular payments after forbearance, you can do one thing. Loan modification With the servicer, who will likely move up your monthly payments, extend the loan term and spread the outstanding balance over the new life of the loan.
Rules governing mortgage relief for loans backed by Freddie Mac are similar. And the agency notes that even if your home survives a disaster but your job doesn’t, you can still get a forbearance.
When your physical and financial life is turned upside down by an external calamity, it can be difficult to think straight. So if you need help dealing with your mortgage and other disaster-related financial problems, you can get free, experienced help.
Individual lenders and mortgage lenders can offer you the services of free housing counselors. And the Federal Emergency Management Agency (FEMA) and other disaster relief organizations can direct you to trusted partners in the field.
There is one such group. Operation HopeWorks out of recovery centers established by FEMA And American Red Cross. It also offers services online and through a mobile app.
Your support person can act as an approved third-party representative to negotiate mortgage forbearance arrangements with your servicer and fill out all necessary applications and documents. Can help you get copies.
In past disasters where the group has worked, including Hurricane Helene and the Maui fires, Operation HOPE has found that borrowers typically default within 48 to 72 hours, said Lance Triggs, the organization’s president of program operations. Let’s decide. The timeline squares with a statement sent to CNN from Chase Homelanding, for example: “Once a customer requests disaster relief, requests are reviewed within 2 business days and reservations are processed immediately. are arranged on.”
Operation HOPE can also help you negotiate with other creditors and help you through the complexities of securing insurance money.
“Historically, we find that at least 40 percent of people [we’ve worked with after a disaster are] Underinsured or not insured,” Triggs said.
If your homeowners insurance policy was dropped or lapsed just before the disaster, Operation HOPE can get on the phone with your old insurer to see if they can reinstate it retroactively. may or may connect you to other resources to help fill the gap.
