Freddie Mac Extends Mortgage Relief for Midwestern Flood Victims

Freddie Mac (FRE: 1.23 -1.60%) said Monday it will extend its “full menu of relief policies” for borrowers affected by the recent floods in the Midwest.

IOWA CITY — Coast Guard Disaster Area Response Teams from St. Louis, MO and St. Paul, MN were deployed to assist local and state agencies in response to reports of flooding in the state of Iowa. (photo:U.S Coast Guard)

“Freddie Mac and the nation’s mortgage servicers will work together to advance available mortgage relief to homeowners affected by these devastating floods,” said Freddie Mac vice president of servicing and asset management Ingrid Beckles. “We are instructing our servicers to work with borrowers with Freddie Mac-owned mortgages to receive forbearance on their mortgage payments for up to one year.”

Flooding hit Iowa City over the weekend, moving down from Cedar Rapids, where 24,000 had been evactuated earlier; the National Gurad evacuated 5,000 people on Sunday, and 400 homes had suffered significant damage, the Associated Press reported.

Parts of Michigan have also been dealing with severe flooding, as well. The latest flooding in Western Michigan followed rain that totaled 11 inches in less than 12 hours Thursday and Friday, and led to sewage line breaks, among other problems.

Servicers have the discretion to reduce or suspend mortgage payments for up to 12 months for borrowers with Freddie Mac-owned mortgages; each case must be individually assessed to determine which alternative will best fit the homeowner’s circumstances, Freddie Mac said.

The GSE also said it will allow servicers to waiving assessments of penalties or late fees against borrowers with disaster-damaged homes; servicers can choose not to report forbearance or delinquencies caused by the disaster to the nation’s credit bureaus, as well.

Disaster responses by mortgage servicers have been well-honed in recent years, in the aftermath of 2005’s Hurricane Katrina, which had caught many unprepared for large-scale regional borrower displacement and property damage.

For more information, visit http://www.freddiemac.com.

Disclosure: The author held no positions in FRE when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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