After you and your loved ones survive a major weather event here in Florida, like a tropical storm, tornado, or hurricane, you have to deal with the aftermath. Along with cleaning up the debris and making repairs, there are the financial repercussions of a hurricane or major storm.
So, how do you make your mortgage payment in the midst of no electricity, receding flood waters, and curfews? Can you find a way to delay or postpone those monthly home loan payments while you regroup and recover? Often, the answer is yes.
FEMA: Florida home after Hurricane Ivan and Hurricane Dennis in 2005.
Negotiations with Your Mortgage Lender
Many national lenders will have disaster relief plans and protocols in place for these kinds of weather catastrophes. They may have prepared a variety of options for their borrowers in the event that a hurricane or tornado comes through a community and devastates many of their mortgagors.
1. Put the Mortgage Payment on Hold (Forbearance)
Many mortgage lenders will agree to freeze the account and put all mortgage payments on hold for several months. Many will offer forbearance for a full year after a huge catastrophe like Hurricane Harvey in Texas or Hurricane Irma in Florida.
During a forbearance period, there will be no late fees. There will be no reports of a delinquency to the credit reporting agencies. The home loan is frozen in place without detriment to the borrower.
NOTE: Having your lender agree to postpone the mortgage payments or offer “forbearance” on your home loan does not change the mortgage itself. You will still owe the full amount of that outstanding mortgage. The loan has been deferred to give you time to deal with things.
2. Renegotiate the Home Loan Terms
If your situation has been changed permanently by the storm, then you may need to renegotiate the terms of the home loan with the lender. Maybe you will not be able to continue in your past job because the weather has destroyed your place of work. Or maybe you’ve been injured and will need time to recover from hurricane-related injuries.
Lenders are amenable, as a general rule, to renegotiation of the terms of the mortgage in these situations. This is particularly true if you are a valued customer of the bank.
Negotiation here will be based upon your individual circumstances. You will need to demonstrate with documentation the extent of your financial upheaval and how much you can afford to pay each month on a mortgage payment in the future.
NOTE: It is possible to have a forbearance followed by a renegotiation of the mortgage after a hurricane strikes.
3. Special Loans for Repair and Rebuild
Lenders may also be willing to offer loans to help their borrowers repair and rebuild their dwellings in the aftermath of a serious storm or hurricane. Flooding and high winds may have resulted in significant repair costs. It is in the best interests of the lender to work with the borrower to get these repairs done, and protect the property’s value. After all, that real estate lien is the protection that the lender has against the mortgage loan.
NOTE: There’s no rule that requires you to get a loan from your mortgage lender to fix the place. If you can find a better deal someplace else, then that’s the loan you should take. The bank cannot insist you deal exclusively with them in the aftermath of the hurricane.
FHA Home Loans
If you have mortgage financing via the Federal Housing Administration (FHA), then the federal agency has established set guidelines for those borrowers impacted by specific events. For example, after Hurricane Harvey in Texas and Hurricane Irma in Florida, the FHA issue a notice that it would be offering 90 days forbearance on all FHA Home Loans for those impacted by these two hurricanes.
The FHA also sets up loan modifications for borrowers impacted by specific storms, like Irma.
For details on your FHA home loan after a hurricane or severe storm, you can call the FHA Resource Center at 1-800-CALL-FHA (5342).
VA Home Loans
For those who have served their country in a branch of the military, they may have a home loan via the Department of Veterans Affairs, or a “V.A. Loan.”
Veterans should contact the VA Home Loan Program at 1-877-827-3702 to discuss their situation.
The VA may not only offer forbearance of the mortgage but also grants to help with its repair costs.
Fannie Mae and Freddie Mac Mortgages
Many Florida home loans are made by mortgage lenders working with the federal government programs Fannie Mae and Freddie Mac. These are two government programs where home loans are purchased from the lenders who make the mortgages and then held by the government or resold to other lenders.
You may or may not know if your mortgage has been purchased by Fannie Mae or Freddie Mac.
Nevertheless, once the Federal Emergency Management Agency (FEMA) declares the neighborhood part of a “disaster area” then their mortgage relief programs, already set in place, go into effect.
1. Fannie Mae
Find out if your mortgage has been purchased by Fannie Mae at this website. If so, then call Fannie Mae for help on your situation at 1-800-2FANNIE or go to the Fannie Mae site for details.
2. Freddie Mac
Find out if your mortgage has been purchased by Freddie Mac at this website. If so, then call Freddie Mac for help at 1-800-373-3343 or go to the Freddie Mac site for details.
When Forbearance Ends, Then What?
After the “freeze” or “forbearance” time period is over, then what happens? If you need more time, then you need to negotiate extending that time frame with your lender.
However, at a certain point, there will be a return to making those monthly payments. Those missed payments will still be due. And you’ll also have the duty to pay current mortgage payments, too.
This means that you will need to cover (1) full repayment of those “frozen” or “forbearance” months or home loan payments in addition to your (2) usual monthly mortgage payment. How can you do this?
1. Repayment Plan
Some borrowers choose to enter into a “repayment plan” where they agree to make a separate payment each month to the bank to cover those “frozen” payments until that amount is paid in full.
2. Loan Modification
Some borrowers cannot afford to stack another payment on top of that monthly mortgage payment, particularly if they were hard hit by the hurricane. Here, their lender may be willing to renegotiate the entire home loan.
This is a “Loan Modification,” and the bank adds those “frozen” payments into your outstanding mortgage balance. You pay the same monthly mortgage payment as before, you’re not faced with two different payments, but your loan principal goes up.
Foreclosure Defense after a Hurricane or Major Storm in Florida
For some, the reality is that they were already in foreclosure proceedings with the bank when the storm hit – or they have been so financially destroyed by the storm that the reality is that they will be defending against foreclosure proceedings in a Florida court proceeding in the near future.
However, for some home loans there are foreclosure protections that can help the home owner after the storm strikes.
For instance, both FHA Loans and VA Loans have “foreclosure moratoriums” as part of their plans. This means that the federal government will not allow foreclosure proceedings to move forward regarding properties that are found in a federally designated “disaster area.”
- Foreclosures on FHA Home Loans are stayed for ninety (90) days. That’s a minimum – it can be longer if the area has been particularly hard hit (think Harvey in Texas; Andrew in Florida; or Katrina in Louisiana).
- This is also true for Fannie Mae and Freddie Mac As part of the deal to buy the mortgage, the lender must agree to the “foreclosure moratorium.” This is an automatic hold on foreclosures for ninety (90) days after the storm hits. See, e.g., the news release from Fannie Mae explaining the terms applicable to 2017 Hurricane Harvey victims.
- The Veteran’s Administration (VA) works with mortgage servicers for a similar 90-day freeze on foreclosure activity after a major disaster.
Florida Foreclosure Defense Lawyer Can Help
After a major storm or hurricane, home owners can be overwhelmed as they try to recover and move forward after the swift and life-changing event of something like Hurricane Andrew or Hurricane Irma.
Dealing with lenders is never simple. Frustrating doesn’t begin to describe having to negotiate your mortgage payments or home loans when you’re trying to restore a house that has been damaged by flooding or torn apart by wind or debris.
Having an experienced Florida real estate attorney who is experienced in foreclosure defense can be invaluable to those who are trying to cope with the aftermath of a Florida hurricane or storm disaster.
Our offices offer a free initial consultation in these matters. Please don’t hesitate to give us a call!
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