Mortgage Relief for Victims of Oil Spillby Tim Manni
Fannie Mae and Freddie Mac recently announced some mortgage relief for homeowners impacted by the BP oil spill. According to financial expert Peter Miller, the relief is in line with other typical mortgage forbearance granted during natural disasters.
Basically, both Fannie and Freddie have given servicers the option to suspend or reduce mortgage payments for borrowers directly affected by the spill.
Under the company’s “Special Relief Measures” policy, servicers may suspend or reduce a borrower’s payments for up to 90 days while the servicer determines the nature and extent of the impact the disaster is having on the condition of the property or on the borrower’s financial condition. At the conclusion of that assessment, servicers have additional flexibilities to evaluate the appropriate loss mitigation alternative based on a case-by-case determination, including an additional three months of forbearance, a loan modification or other customized solution.
Freddie Mac’s forbearance policies give servicers the discretion to suspend a borrower’s mortgage payments for up to three months or reduce payments for up to six months. Servicers may recommend forbearance for up to twelve months, based on the borrower’s individual circumstances.
Fannie and Freddie both advise borrowers to contact their servicers to find out more about their Special Relief Measures.
It’s important to know all the details about your mortgage forbearance before you proceed. Miller offers the following advice:
If you are able to get mortgage payments suspended, be sure to ask your servicer how the money is to be repaid. For instance, will money be added to your monthly cost once payments resume? Will the loan term be extended? Etc.
If a foreclosure action is halted can you bring your loan current and stop the foreclosure during the suspension period?
Also, if you’re turned down by your servicer ask if their decision can be appealed. If yes, to whom?
Finally, carefully document all servicer contacts — name, date, who you spoke with, etc. Send in paperwork by certified mail with a return receipt requested to prove when things were sent — and when they were received.