When Disaster Strikes, Help Is on the Way for Homeowners
Like many homeowners in the New York area, the Burkhardts saw their lives turned upside down in October 2012, when Hurricane Sandy devastated their beachfront apartment building in Rockaway Park.
While Robert and Meng Burkhardt heeded the warnings and safely evacuated the area with their
3-year-old son, they didn’t foresee the second wave of disruption that would continue to impact their lives nearly two years later — money troubles.
The day after the storm, they returned to find the apartment lobby submerged in six feet of water. Soon, they would find themselves up to their necks in financial obligations, as well. Like other homeowners left shelterless in the wake of a natural disaster, the Burkhardts were trying to juggle short-term housing costs along with their existing mortgage and maintenance payments, with few ideas of where to turn for help.
Their lack of Internet access and cell phone reception made it difficult to communicate with insurance and mortgage companies. “We kept reaching out to our mortgage company, but not getting the help we needed,” says Meng. “We were becoming very frustrated.”
Then a letter arrived from Fannie Mae about a local event on mortgage assistance. While the Burkhardts were unable to attend, the letter would lead them to getting the relief they needed — loan forbearance in the form of a 13-month reprieve from mortgage payments.
“In the wake of the hurricane…managing everything was backbreaking,” Meng told The Home Story. “This letter came to us at the most opportune time.”
Navigating the Waters
What the Burkhardts — along with many other homeowners — weren’t aware of in the post-disaster fog was that borrowers often have options.
Indeed, paying your mortgage may not seem like a priority when you’re just trying to figure out how to put a roof over your family’s head and food on the table. But once you’ve filed an insurance claim and explored your options for emergency disaster relief, a call to your mortgage company could provide some breathing room as you figure out a longer-term living situation.
Jack Maloney, a foreclosure prevention specialist at Fannie Mae, said he was surprised by the lack of awareness among homeowners when he visited disaster relief sites set up by the Federal Emergency Management Agency (FEMA) after Sandy.
“We thought people would be asking about mortgages, but they didn’t,” says Maloney. “What we saw at centers in Long Island, New Jersey and other areas was that people were concerned about supplementary housing and where to get food.”
Maloney visited coastal towns across New York and New Jersey that each suffered damage to more than 300,000 housing units from Sandy – the second most costly hurricane in U.S. history.
“We basically acted not in our triage mode, but giving them information so that when they did talk to their [mortgage company], they were aware that they were eligible for forbearance,” says Maloney. “Our job is to really be the resource.”
Conducting informational sessions at FEMA sites and nonprofit organizations, he discovered that even when people did contact their mortgage companies, they weren’t getting the help they needed.
“Typically, we found most of the [mortgage companies] were giving them three months off and then asking them for the whole three months to be made up the next month,” says Maloney.
Adjustable Mortgage Terms
While each mortgage company can set its own policies for disaster relief, Fannie Mae has guidelines for mortgage companies that service the mortgages it owns.
Fannie Mae’s relief guidelines to mortgage companies include:
- If you’re current on your mortgage payments or less than three months delinquent, you could be eligible for up to 12 months of forbearance.
- If you have fallen behind on your mortgage payments for more than three months, you could still be eligible for up to six months of relief.
- Once the forbearance period has ended, you must repay the amount that was reduced or suspended. You can make a lump-sum payment or modify the mortgage, lengthening the term of the loan and moving the delinquent payments to the end of the mortgage term.
- If foreclosure proceedings have already begun, you may be eligible to have them suspended.
“Fannie Mae can work with people and their bank to get the modification that they need,” says Maloney, noting that since Fannie Mae buys so many mortgages from banks, it can often get a faster response.
In the Burkhardts’ case, they called the number listed on the letter for the Fannie Mae Mortgage Help Center, and a housing advisor worked with their mortgage company to get them relief. “My advice would be to contact your mortgage company immediately,” says Meng.
Maloney concurs, saying, “a lot of people get so caught up in stuff, they just forget.”
He also urges homeowners to open every piece of mail, noting that people under duress can sometimes drift into avoidance mode. “There’s some relief out there,” he says. “It might not be the easiest relief — you’re going to have to probably have some financial stress — but something that is healthier to pay.”
Here are some additional resources homeowners can seek for assistance:
- For FEMA housing assistance, click here.
- For Freddie Mac disaster relief policies, click here.
- For FHA-backed loans, contact the U.S. Department of Housing and Urban Development.
- For VA-backed home loans, contact the U.S. Department of Veterans Affairs.