Fannie Touts Flood Relief, Makes Donation to Red Cross

As expected, Fannie Mae (FNM: 6.01 0.00%) said Tuesday that it has put mortgage relief provisions in place for borrowers facing hardships as a result of the floods that began June 6 and have caused widespread destruction and damage throughout several Midwestern states, including Iowa, Indiana and Wisconsin. The announcement comes after a similar program was rolled out at sister GSE Freddie Mac (FRE: 4.17 0.00%) on Monday.

Using Fannie Mae’s single-family servicing guidelines on disaster relief, lenders will be allowed to suspend or reduce the borrower’s mortgage payments for up to six months, as well as offering mortgage loan repayment plans that may extend for up to 18 months if individual cases warrant it.

In addition, Fannie Mae, through its Office of Community and Charitable Giving, said that it had given a $25,000 grant to the American Red Cross to help them provide emergency shelter, food, and assistance for those affected by the floods.

Severe flooding this widespread has put many disaster programs developed for Hurricane Katrina back into action; that includes servicing guidelines developed by GSEs to deal with tens of thousands of displaced homeowners.

The River Front Terrace Project and the children’s playground in Clarksville, MO is swallowed whole by the Mississippi River. (photo:Eagle 102 via Flickr)

The threat of flood damage has not yet passed for many in the Midwestern section of the United States: numerous media reports noted that floodwaters moved down the Mississippi on Wednesday morning, breaching two levees in western Illinois and threatening more river towns in Missouri after inundating much of Iowa for the past week.

Damage from the flooding so far is estimated at an eye-popping $1.5 billion, according to media reports.

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