Mortgage Help for Homeowners Affected by Disasters
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Mortgage Loan Obligations
Disaster survivors who are facing foreclosure should take immediate action. Check with your lender or servicer to see if the U.S. Department of Housing and Urban Development (HUD) extended the foreclosure timeline for your area. Sometimes HUD requires foreclosure delays in Presidentially- Declared Major Disaster Areas. If HUD extended the foreclosure timeline in your area, try to bring your account up to date before the foreclosure resumes. You can find out when it resumes by checking HUD’s website, contacting your lender or servicer, or calling a HUD-approved housing counseling agency.
Disaster survivors might try to get in touch with their bank or mortgage servicer to obtain relief for a property affected by a disaster event. If contacted, the mortgage company might give more flexible options to make the monthly payment or even waive late fees or other penalties.
Disaster survivors might wonder if they need to continue to pay their home mortgage if their house is damaged and they cannot live in it. You must still pay your mortgage even if your home is damaged and cannot be lived in. Disaster survivors might check with lenders to see about forbearance. If a homeowner has an FHA-approved lender they might be eligible for a 90-day moratorium on foreclosures of FHA-insured properties in a disaster area.
Disaster survivors who have a home that is lost due to substantial or total destruction might want to talk to a mortgage servicer as soon as possible after a disaster. This can help postpone or prevent foreclosure on the property.
Disaster survivors with private loans (i.e., not government-backed) might contact the lender to get help with making payments or preventing foreclosure. it will be up to the lender of the mortgage and the disaster survivor to work out the details of the payment. Lenders may give forebearance for a period of time. Disaster survivors who can get forbearance with their mortgage should be aware that they still have to make payments later-on.
Disaster survivors with FHA-backed home loans are sometimes eligible for resources that allow them to remain in their homes and deal with issues making payments to their home loans. The FHA has a disaster relief policy, under the Robert T. Stafford Disaster Relief and Emergency Assistance Act where, if (1) you or your family live in a federally-declared disaster area; (2) you are a household member of someone who is deceased, missing, or hurt because of a disaster; or (3) your ability to pay your mortgage is significantly impacted by the disaster, then the lender cannot foreclose on its mortgage for a 90-day period. The FHA advises lenders to work with mortgages that are affected by natural disasters. It is important for disaster survivors to contact their mortgage services and let them know they qualify for FHA Disaster Relief.
The United States Department of Housing and Urban Development (HUD) instructs FHA lenders to use reasonable judgment in determining who is an "affected borrower." Lenders are required to reevaluate each delinquent loan until reinstatement or foreclosure and to identify the cause of the default. Disaster survivors can contact their lenders to know about their particular situation.
Some of the actions a lender may take to help to help homeowners:
- During the term of a moratorium, your loan may not be referred to foreclosure if you were affected by a disaster.
- Your lender will evaluate you for any available loss mitigation assistance to help you retain your home.
- Your lender may enter into a forbearance plan, or execute a loan modification or a partial claim if these actions will help retain and pay for your home.
- If saving your home is not feasible, lenders have some flexibility in using the pre-foreclosure sales program or may offer to accept a deed-in-lieu of foreclosure.
Eligibility for a Foreclosure Moratorium
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Disaster survivors who have homes that suffer damage in the disaster and have missed mortgage payments may be eligible for a foreclosure moratorium for FHA-backed home loans.
You may be eligible for FHA Disaster Relief if you are one of the affected borrowers as described below. You must be in one of three basic groups in order to qualify for a moratorium on foreclosure:
- If you or your family live within the geographic boundaries of a Presidentially-declared disaster area, you are automatically covered by a 90-day foreclosure moratorium.
- If you are a household member of someone who is deceased, missing, or injured directly due to the disaster, you qualify for a moratorium.
- If your financial ability to pay your mortgage debt was directly or substantially affected by a disaster, you qualify for a moratorium.
A Foreclosure Moratorium applies only to borrowers who are delinquent on their FHA loans. If you are current on your loan payments, then you should continue to make them.
FHA lenders will automatically stop all foreclosure actions against families with delinquent loans on homes within the boundaries of a Presidentially-declared disaster area.
It is very important that you notify your lender to be sure that they realize you are an affected borrower. Your lender may request supporting documentation and use it to determine if you meet the relief criteria. Once identified as an affected borrower, foreclosure action may be stopped for the duration of the moratorium period.
If your home was damaged in the disaster or you will not be able to make your monthly loan payment(s) because your finances were adversely affected, contact your lender immediately to request assistance.
Borrowers who were injured or whose income relied on individuals who were injured or died in the disaster will be asked for documentation such as medical records or death certificates, if available. Your lender will ask you for financial information to help evaluate what assistance can be provided to you to reinstate your loan.
FHA’s Foreclosure Moratorium only applies to borrowers in default. If you are current, you should continue to make your mortgage payment whenever possible. If, however, you are unable to pay your loan as a result of the disaster, your lender may waive any late fees normally charged and let you know about other options. Also, if you foresee ongoing problems in making your mortgage payments resulting from changes in your financial status, you should contact your lender immediately.
HUD is confident that your mortgage lender will make every attempt possible to assist you. If you are not satisfied after discussing possible relief actions with your lender, please call a HUD-approved counseling agency toll-free at (800) 569-4287 or contact HUD's National Servicing Center.
Coming Out of Disaster Forbearance
What to Know About Coming out of Disaster Forbearance
Disaster forbearance of mortgage payments may be a temporary but critical lifeline for homeowners who are facing financial hardships caused by a disaster event. Although a temporary pause or reduction in the monthly payment with forbearance during a disaster may help a homeowner keep a home, it is important a homeowner prepares for when forbearance ends and normal payments begin again.
A forbearance period during a disaster reduces or suspends mortgage payments to help homeowners who are facing a short-term hardship some time to recover. During a forbearance period, the mortgage company may not assess late fees and will not report forbearance or delinquencies caused by the disaster to credit bureaus. When disaster forbearance ends, the options may vary depending on the loan servicer.
Options if a homeowner is no longer facing hardships related to a disaster
A homeowner who is financially able to resume monthly mortgage payments can make that payment and any other missed payments from the forbearance period to the loan-servicer. Once a homeowner catches up on all missed payments, a homeowner can resume their normal monthly mortgage payment.
If a homeowner can begin making monthly-mortgage payments again but not be able to pay back all their missed payments at once. Homeowners in this situation can ask their servicer about a payment plan. A payment plan can help spread out the missed amount of money over time, making repayment more manageable for the homeowner. A homeowner who takes part in a repayment plan might expect a slight increase in their monthly mortgage payment until the total amount is paid back.
Homeowners who are able to resume their monthly payment but unable to incur any increases for a repayment plan may be eligible for a lender's mortgage modification options, designed to bring a homeowner current on their mortgage with minimal impact on their existing mortgage terms.
Forbearance extension. A homeowner may be able to extend their forbearance period for up to 12 months to give themselves more time before payments resume.
Forbearance modification. This option may allow a homeowner to permanently reduce the amount of their monthly payments and allow them to start making progress on their missed payments.
A homeowner should stay in contact with their loan servicer through the disaster forbearance period to discuss options before the period ends. The servicer will work with the homeowner to find the best repayment options within the homeowner's eligibility.