Mortgage relief available for hurricane victims

Freddie Mac and Fannie Mae, the two biggest players in the secondary mortgage market, informed lenders that borrowers with homes damaged in Hurricane Sandy have mortgage relief options available to them.

The program, which will provide forbearance up to a year as one potential option, is available to homeowners with Freddie loans and properties located in zones classified as major disaster areas.

Forbearance does mean forgiveness. It usually is a short-term agreement between borrower and lender permitting a suspension of payments or partial payments until normal payments can be resumed. Typically, forbearance agreements run three to six months.

Freddie Mac said servicers dealing with qualified borrowers have the option to suspend foreclosure and eviction proceedings up to a year. They also can waive penalties or late fees and delay the reporting of delinquencies to credit bureaus.

The relief efforts used will be decided on a case-by-case basis.
Fannie Mae confirmed that its current policies allow services to grant forbearance to borrowers when a qualified disaster occurs.

“They can do up to 90 days of forbearance, then evaluate the borrower’s situation to determine if additional forbearance is necessary based on damage to the property or the borrower not being able to make payments,” said Fannie Mae’s Pete Bakel.