Programs may help
That doesn't mean that if you lose your home to a natural disaster, you're just out of luck. Depending on the lender and the situation, there may be strategies in place to help. "Lenders may suspend mortgage installments or late payments for a limited period or even stop foreclosure activity altogether, particularly in areas subject to a federal disaster declaration," they said.
In Harvey's wake, "Fannie Mae, Freddie Mac and the Federal Housing Administration have announced that they will offer forbearance for at least 90 days to borrowers in the Houston area," said CNBC. "The mortgage backers could extend forbearance for up to a year." They point out while borrowers will be able to delay payments, interest will still accrue. "The offer is a band-aid, not a cure."
It's a smart move for Fanny, Freddie, and the FHA. The situation in the Houston area is grim and the potential for widespread default is huge. "In the Houston area and outlying areas hit by Hurricane Harvey, there are more than twice as many mortgage properties with nearly four times the unpaid principal balance as there were in the Louisiana and Mississippi counties hit by Hurricane Katrina in 2005," said CNBC. "If the impact on homes is similar, more than 75,000 Houston borrowers could become unable to make a mortgage payment within the next two months and 45,000 could become seriously delinquent on their loans in the next four months, according to Black Knight Financial Services."
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