Unprecedented flooding in Louisiana led to the rescue of over 20,000 people, according to an article by Scott Calvert for The Wall Street Journal.
Fannie Mae granted mortgage servicers additional leeway to help some of Louisiana’s flood victims.
Under Fannie Mae’s guidelines for single-family mortgages, servicers have the ability to grant an initial period of forbearance, the postponement of legal action in regards to the payment of a debt, to any borrower they believe has been affected by this natural disaster. Servicers may also request additional forbearance from Fannie Mae.
Freddie Mac offers a similar option to homebuyers affected by natural disasters. Click here to see Freddie Mac’s disaster relief policies.
The President declared a major disaster exists in the State of Louisiana. Following the recent disaster declaration for individual assistance issued by the Federal Emergency Management Agency, the IRS announced affected taxpayers in the parishes of East Baton Rouge, Livingston, St. Helena, and Tangipahoa will receive tax relief.
Some of the relief options mortgage servicers may use include delaying foreclosures and other legal proceedings in these areas.
“We know that many people have had their lives disrupted by the flooding in Louisiana,” said Malloy Evans, Fannie Mae vice president of servicing.
“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,” Evans said. “Our thoughts are with all of those who have been impacted.”
Fannie Mae’s disaster relief guidelines outline that servicers may temporarily suspend or reduce a homeowner’s mortgage payments for up to ninety days if the servicers believes a natural disaster made a home inhabitable or if the disaster prevents the homeowner from being able to make payments.
Often times, it is difficult to reach homeowners in natural disaster situations, therefore if Fannie Mae can’t contact the homeowner, the decision power goes to the servicer.
If the servicer is able to contact the homeowner, they can offer forbearance for up to six months, and can even extend it for an additional six months if before the disaster, the homeowner was current or 90 days or less delinquent.