FHA Urges Industry to Extend Forbearance To Gulf in Wake of Latest Hurricane Threat
Shortly after Hurricane Gustav slammed into the Louisiana coast last week, the Department of Housing and Urban Development declared a 90-day moratorium on Federal Housing Administration foreclosures and called on the mortgage industry to provide similar relief for homeowners affected by the storm.
"HUD is ready to support families in getting back on their feet as quickly as possible," HUD secretary Steve Preston said. "One way to do that is call a time out on foreclosures in these disaster areas and call on the rest of the mortgage lending community to follow suit."
The moratorium applies to counties that have been declared disaster areas by the federal government.
Freddie Mac told its servicers to be lenient with Gulf Coast homeowners and gave its servicers the "discretion to reduce or suspend mortgage payments or foreclosures for up to 12 months."
Freddie vice president for servicing Ingrid Beckles said borrowers should contact their servicers for relief if their homes have been damaged or destroyed by the hurricane.
"Freddie Mac and the nation's mortgage servicers will work together to bring some measure of financial relief to homeowners effected by Hurricane Gustav," Ms. Beckles said.
Fannie Mae told its servicers they can suspend or reduce borrowers' mortgage payments for up to four months and/or offer loan repayment plans that may extend up to 18 months.
Fannie servicers also have the discretion to suspend foreclosures on a case-by-case basis.
This response is based on Fannie's current assessment of the situation, according to company spokeswoman Christina McHenry. "As events develop on the ground, we will reassess and if warranted consider further steps," she said.
Since Hurricane Katrina in 2005, Fannie, Freddie and HUD have developed standard relief and servicing practices for dealing with natural disasters. Fortunately, Hurricane Gustav was not as strong as Katrina and the damage less severe. However, Gustav has left over one million families and businesses without electrical power, according to Sen. Mary Landrieu, D-La., and they could be without power for 10 days to six weeks.
The senator has asked President Bush for emergency energy assistance and to dispatch Energy Department expert response teams and electric generators to Louisiana. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/