Fannie Mae and Freddie Mac are working with the Federal Housing Finance Agency to align their disaster relief response in the midst of a massive tornado outbreak in Oklahoma and surrounding states.
The relief mechanisms deployed for homeowners with GSE loans stem from existing guidelines frequently deployed by Fannie and Freddie after severe weather events.
The disaster guidelines give impacted borrowers several relief options, including foreclosure suspension up to 12 months, loan forbearance of up to a year and protected credit profiles with agencies and servicers agreeing not to report disaster-related delinquencies to credit bureaus, said Brad German with Freddie Mac. Waivers on penalties and late fees also are granted in the wake of severe storms, German said.
Monday's outbreak hit Moore, Okla., and surrounding areas, resulting in a tragic loss of life and extensive property damage.
Pete Bakel with Fannie Mae calls it standard procedure for the GSEs to "give servicers on the ground up to 90 days to stop any foreclosure actions until they can get a handle on the impact."
But at this point, Bakel says it’s too early to assess how many damaged properties fall under the purview of the enterprises. The GSEs want to ensure everyone is safe and the recovery is the focus right now, Bakel said.
In late 2012, Fannie Mae and Freddie Mac reminded servicers of what options are available to homeowners with GSE loans in the wake of Hurricane Sandy.
The GSEs did the same Tuesday morning. Fannie released a statement saying, "Under Fannie Mae’s disaster relief guidelines, a servicer may temporarily suspend or reduce a homeowner’s mortgage payments if the servicer believes a natural disaster has adversely affected the value or habitability of the home or if the natural disaster has impacted the homeowner's ability to make payments on their mortgage."
The enterprise added, "Since a storm or other disaster may make it difficult to reach homeowners, Fannie Mae allows servicers to grant this relief even if they cannot contact the impacted homeowner immediately."