If you’re affected by a hurricane, flood or another natural disaster, what does it mean for your mortgage? This is a pertinent question for homeowners in the path of Hurricane Dorian in Florida and nearby states. Here are frequently asked questions and answers.
What should I do first?
Get in touch with the following entities:
- The Federal Emergency Management Agency. You can register with FEMA online, in person at a disaster recovery center or by calling 800-621-3362.
- Your homeowners insurance company, plus your flood or earthquake insurance company, if either applies to your situation.
- Your mortgage servicer. That’s the company that you send your monthly payments to; it might not be your original mortgage lender.
I can’t pay my mortgage. What are my options?
If the disaster makes it impossible to make your monthly house payments, ask your servicer for mortgage forbearance. A forbearance “allows you to stop making your payments for an agreed-upon time,” a Freddie Mac spokesperson said.
In a forbearance agreement, you might make partial payments or stop making payments for a specific time. Generally, a forbearance lasts up to six months and can be extended up to another six months. Interest still accrues during the time you aren’t making full monthly payments. But under a forbearance agreement, the lender won’t charge late fees or report you to credit bureaus.
The lender will want you to catch up on your missed payments after the forbearance period is over. That might involve paying extra every month for a few years, modifying the loan or reaching some other negotiated agreement.
To talk with a Department of Housing and Urban Development-approved housing counselor before agreeing to forbearance, call 800-569-4287.
What aid is available?
Direct federal aid consists mostly of loans from the Small Business Administration. As odd as that may seem, the SBA is in charge of delivering disaster-related loans to individuals and families.
The SBA extends loans at favorable interest rates to replace or repair primary residences. You can borrow up to $200,000 to cover renovation or construction costs. Whether you’re a renter or a homeowner, the SBA will lend you up to $40,000 to replace personal property such as clothing, furniture, appliances and vehicles.
FEMA offers grants to fill in gaps between insurance payouts and SBA loans. The current maximum grant is $34,000 per household for disasters that happen on or after October 1, 2017. Grants can be used for expenses such as basic home repairs that aren’t covered by insurance, temporary rent and disaster-caused medical and child care.
The Federal Housing Administration has a program that’s designed to help disaster survivors rebuild or buy replacement homes. Under the Section 203(h) program, the FHA insures mortgages for people whose homes were destroyed or damaged in disasters. Borrowers don’t have to make a down payment.