Navigating Mortgage Relief After a Natural Disaster: What Homeowners Need to Know
For those directly impacted by Hurricane Helene, our hearts go out to you as you navigate the recovery process.
When a natural disaster strikes, it can disrupt every aspect of life, including your ability to stay on top of your mortgage payments. Whether your home has been affected by Hurricane Helene or you’re simply concerned about what might happen in the future, it’s important to understand your options.
Mortgage servicers, federal agencies, and local organizations offer a range of programs designed to provide mortgage relief and support during these challenging times.
For example, Freddie Mac recently announced immediate mortgage relief options for affected homeowners.
“For those impacted by Hurricane Helene throughout the Southeast, Freddie Mac and our partners stand ready to provide immediate assistance,” said Mike Reynolds, Freddie Mac’s Single-Family Vice President and Head of Servicing. “Safety is the top priority, and once out of harm’s way, we want homeowners and their families to know our mortgage relief options are available to help support their recovery.”
Here's a guide to the mortgage assistance available for homeowners in disaster areas.
Mortgage Assistance Options for Homeowners in Disaster Areas
If your home is in a disaster area, you may be eligible for several forms of mortgage assistance. These programs are designed to help you avoid foreclosure and manage your mortgage payments while focusing on recovery. Here's what you need to know about the most common relief options.
Forbearance Programs
Forbearance is one of the most common forms of mortgage relief offered to homeowners in disaster-stricken areas. With a forbearance plan, your mortgage servicer allows you to temporarily pause or reduce your payments for a set period. This gives you the breathing room needed to manage the immediate expenses of repairs, relocation, or loss of income.
- How long does forbearance last? Forbearance can typically last anywhere from 3 to 12 months, depending on the servicer and the extent of the disaster’s impact.
- What happens after forbearance ends? Once the forbearance period ends, you’ll have several options for repayment. Some servicers will allow you to add the missed payments to the end of your loan term, while others may offer a repayment plan or loan modification. Be sure to discuss these options before the forbearance period concludes.
Loan Modifications
If your financial situation has changed dramatically due to the disaster and you're unable to resume regular mortgage payments after a forbearance, a loan modification may be a solution. Loan modifications adjust the terms of your mortgage, which may include:
- Extending the loan term to reduce your monthly payment.
- Adding missed payments to your principal balance.
By modifying the terms of your loan, you may find a more manageable payment plan that aligns with your post-disaster financial reality.
Suspension of Foreclosure Proceedings
In many disaster-declared areas, mortgage servicers will temporarily halt foreclosure actions. If you’re struggling to make your payments due to the disaster, this gives you time to explore assistance options without the immediate threat of losing your home.
Government-backed loans, such as Fannie Mae, Freddie Mac, and VA loans, participate in foreclosure moratoriums for homes in presidentially declared disaster areas. This allows homeowners the necessary time to recover before any legal actions can take place.
Disaster-Specific Mortgage Programs
Homeowners with loans backed by federal programs such as FHA or VA may be eligible for additional disaster relief options. These programs include:
- FHA Disaster Relief: The FHA offers a variety of programs, such as forbearance and loan modification. Additionally, FHA’s Section 203(h) program provides insurance for loans used to rebuild or purchase a new home if yours was destroyed in the disaster.
- VA Disaster Relief: If you have a VA loan, you may be able to qualify for a special forbearance or loan modification tailored to disaster recovery. The VA also allows for temporary payment suspension, as well as flexible repayment options after the disaster.
Payment Waivers and Late Fee Forgiveness
Disaster-affected mortgages may also be eligible for waived late fees for missed or delayed mortgage payments. This can help alleviate some of the financial pressure and provide peace of mind as you handle the more urgent needs of repair or relocation.
Additionally, payment deferrals, where missed payments are added to the end of your loan term may be possible.
No Negative Credit Impact
Under forbearance plans related to natural disasters, your missed or reduced payments are generally not reported to the credit bureaus. This ensures that the financial strain caused by the disaster doesn’t affect your credit score, giving you the opportunity to recover without further financial penalties.
Take Action and Stay Informed
Facing the aftermath of a natural disaster is stressful enough without the added concern of how to handle your mortgage. Fortunately, there are a variety of resources available to help homeowners navigate these difficult circumstances and regain financial stability.
Whether you need temporary relief, long-term assistance, or a path to rebuild, federal programs, local organizations, and of course, you local mortgage professional are here to support you. Stay informed, take action early, and lean on trusted resources to protect your home and financial well-being.