Fannie Mae and Freddie Mac, the mortgage giants of the country, have prolonged their disaster relief deadline for borrowers whose homes were affected by Hurricane Sandy. The government-appointed mortgage regulators have promised to continue with their relief plans for homeowners residing in places that have been marked as disaster zones by President Barack Obama.
Fannie Mae and Freddie Mac have turned out to be the biggest mortgage bankers in the US after the federal government bailed them out during the economic meltdown of 2008 that devoured other financial giants like Lehman Brothers. These two government-anointed housing finance agencies do not directly lend money to consumers, but they buy loans from the mortgage lenders and convert them into bonds that are sold to the investors.
Thousands of people were affected the recent natural disaster hitting U.S. shores. Hurricane Sandy created a strom surge as high as 14 feet that flooded the streets of the cities lying close to the coast. Moreover, a long-term darkness has descended on some of the streets and people are living without electricity ever since the superstorm hit the eastern coast of U.S. According to the preliminary estimates, total damage incurred by the government due to this natural calamity may top $10 billion.
Acting in response to this widespread destruction, Freddie Mac’s senior vice president for single-family servicing and real estate owned, Ms Tracy Mooney, has granted permission to all mortgage servicers across the country to give all out help and support in terms of home mortgage relief to hurricane victims. However, the provision applies only to the loans that were brought by Freddie Mac or where it played the role of a guarantor.
Freddie Mac has decided to encourage mortgage servicers to cooperate with the disaster-affected borrowers who have loans owned by them. In order to achieve this objective, Freddie Mac has already asked the lenders to halt all foreclosure and eviction activities against the borrowers whose properties received the brunt of the storm for one year. Moreover, during the same period, it will grant payment forbearance facility to the storm-affected borrowers.
Furthermore, borrowers can also enjoy low monthly payments for the coming year, because Freddie Mac will waive penalty charges and/or late fines levied on their loans, besides opting out of reporting forbearance and delinquencies to the credit bureaus. However, mortgage relief will be doled out to people on an individual basis after careful evaluation of their current monetary condition.
Apart from Freddie Mac’s mortgage relief policy, Fannie Mae also has an agreement with its mortgage servicers that allows borrowers of loans backed by it, to enjoy forbearance for a maximum of 90 days. Hence, it had already apprised the mortgage servicers of the provision included in their agreement before the devastating storm struck the US shores. Thankfully, this relief policy or the agreement of Fannie Mae had been revamped in 2009. They will provide much need financial solace to borrowers suffering because of the hurricane.