Disasters such as wildfires, hurricanes, and floods can destroy homes and displace families, but they don’t erase financial obligations like mortgages. Even if your home becomes uninhabitable, you’re still responsible for repaying your loan. Fortunately, disaster relief programs may offer temporary solutions to ease the burden. Here’s what you need to know.
Contacting your mortgage Servicer
Your first step is to contact your mortgage servicer, whose information can be found on your monthly statement. They will inform you of your options, which may include forbearance—a temporary reduction or suspension of your mortgage payments.
The type of relief offered depends on the institution backing your loan. This could be a private bank, Fannie Mae, Freddie Mac, or a federal agency like the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). If you’re unsure who backs your loan, your servicer can provide that information.
For federally backed loans, you might qualify for forbearance lasting three to 12 months. During this period, late fees and actions are typically suspended. Some entities, like Fannie Mae, extend forbearance even if you were already delinquent on payments before the disaster.
If you haven’t contacted your servicer, certain programs may still grant temporary relief. For instance, Fannie Mae expects servicers to automatically offer 90 days of forbearance for homes located in presidentially declared disaster areas. However, during this period, you must contact your servicer to arrange extended relief and provide details about your financial situation.
In some cases, state or local governments may also intervene. For example, following Los Angeles wildfires, California Governor Gavin Newsom announced that five major banks—Bank of America, Citi, JPMorgan Chase, US Bank, and Wells Fargo—would offer automatic 90-day mortgage relief and protect borrowers from foreclosures for at least 60 days.
After forbearance ends
When your forbearance period concludes, the suspended payments aren’t erased—you’ll still owe the total amount. However, repayment plans are flexible and depend on your circumstances.
If you’re financially stable, your servicer may allow you to spread the missed payments over a longer period while continuing your regular monthly payments. Alternatively, you could negotiate a loan modification to lower your monthly payments, extend the loan term, or restructure the arrearages over the modified loan’s lifespan.
Borrowers whose homes survived but whose income was disrupted may also qualify for relief under similar terms. Freddie Mac’s guidelines, for example, provide options for job-related hardships after a disaster.
Accessing free assistance
Recovering from a disaster often feels overwhelming, especially when juggling financial and housing concerns. Fortunately, free assistance is available to help you navigate the process.
Organizations like the Federal Emergency Management Agency (FEMA) and Operation HOPE provide resources to affected homeowners. Operation HOPE, in particular, offers trained counselors who can negotiate forbearance agreements, fill out applications, and help recover lost documents.
For those underinsured or uninsured, Operation HOPE can assist in exploring retroactive policy reinstatements or alternative resources. According to Lance Triggs, president of program operations, lenders typically review disaster forbearance requests within 48 to 72 hours, expediting relief for affected borrowers.
In addition to mortgage support, Operation HOPE can help you manage other financial obligations, such as negotiating with creditors or navigating insurance claims.
By reaching out to your servicer promptly and k available resources, you can better manage the financial fallout from disasters while protec bting your long-term financial stability.
