Homeowners who go through a natural disaster—like Hurricane Harvey, Irma, or Maria—and then have difficulty making their mortgage payments are often entitled to different forms of foreclosure relief, including a moratorium (which means a foreclosure can’t start or proceed) and possibly a foreclosure avoidance option, like a forbearance or loan modification.
Keep reading to learn about foreclosure moratoriums and other types of foreclosure relief that are typically available to homeowners with Fannie Mae and Freddie Mac loans following a natural disaster.
Under normal circumstances, if you don’t make your mortgage payments, the loan owner may foreclose. In some cases, though, a foreclosure moratorium will prevent this from happening—at least temporarily.
A foreclosure moratorium may go into effect:
Fannie Mae (the Federal National Mortgage Association or FNMA) and Freddie Mac (the Federal Home Loan Mortgage Corporation or FHLMC) are government-sponsored enterprises that own or back (guarantee) many of the mortgages in the U.S.
When a borrower gets money from a lender to buy a home, that original lender sometimes keeps the loan. Often though, the original lender won’t hold on to the loan. Rather, the lender will sell the loan to a new owner—called an investor—like Fannie Mae or Freddie Mac. Fannie Mae or Freddie Mac then either keeps the mortgage in their portfolio or packages the loan with other loans into mortgage-backed securities, which are then sold to private investors.
If you have a Fannie Mae loan and you meet certain criteria, you’re entitled to a foreclosure moratorium and possibly a foreclosure avoidance option, like a forbearance or loan modification, after a natural disaster.
Forbearance. Borrowers affected by a natural disaster—like Hurricane Harvey, Irma, or Maria—may get a forbearance (reduced or suspended payments) for a period of up to twelve months.
Foreclosure relief. Fannie Mae generally also requires that servicers provide certain protections to borrowers, including:
Fannie Mae suspended foreclosure sales through March 31, 2018, for properties in FEMA-declared disaster areas in Puerto Rico and the U.S. Virgin Islands affected by Hurricanes Irma and Maria.
Modifications. In some cases, Fannie Mae offers borrowers affected by a natural disaster an “Extend Modification for Disaster Relief” (Extend Modification), which is a temporary post-disaster loan modification. This type of modification is a fixed-rate modification that extends the mortgage loan term in monthly increments to match the number of delinquent payments, not exceeding 12 months. If you don’t qualify for an Extend Modification, you might qualify for a Capitalization and Extend Modification for Disaster Relief (in which the servicer capitalizes the arrearages and extends the term of the loan) or a Flex Modification.
Finding out if Fannie Mae owns your loan.To find out if Fannie Mae owns your mortgage, use Fannie Mae's Loan Lookup. For more information about foreclosure relief after a natural disaster, go to the Fannie Mae Disaster Relief website. To find out about foreclosure relief—including a forbearance, moratorium, and/or modification in your particular situation—contact your mortgage servicer (the company you send your monthly payment to).
If you have a Freddie Mac loan you might qualify for a forbearance, foreclosure moratorium, loan modification, or other foreclosure relief.
Forbearance. Freddie Mac allows servicers to give borrowers a forbearance period of up to twelve months if affected by a natural disaster, including those affected by Hurricanes Harvey, Irma, and Maria.
Foreclosure relief. Freddie Mac generally requires servicers to do the following after a natural disaster:
Freddie Mac suspended foreclosure sales through March 31, 2018, for properties in Eligible Disaster Areas in Puerto Rico and the U.S. Virgin Islands affected by Hurricanes Irma and Maria.
Modifications. Freddie Mac also offers Extend Modifications, Capitalization and Extend Modifications for Disaster Relief, and Flex Modifications to eligible borrowers. If you've gone through a natural disaster and are having difficulty making your monthly payments, you might qualify for one of these options.
Finding out if Freddie Mac owns your loan. To find out if Freddie Mac owns your mortgage, use the Freddie Mac Loan Look-Up Tool. For more information about relief after a natural disaster, go to the Freddie Mac Natural Disaster Relief website. To find out about foreclosure relief—including a forbearance, moratorium, and/or modification in your particular situation—contact your mortgage servicer.
If you have questions about how foreclosure works in your state or want to learn about possible foreclosure defenses in your circumstances, consider talking to a local foreclosure attorney. If you want to learn more about different ways to avoid a foreclosure, consider talking to a HUD-approved housing counselor.
To learn about foreclosure relief after a natural disaster if you have an FHA, VA, or other type of loan, read Help for Homeowners Facing Foreclosure After Hurricane Harvey, Irma, or Maria: FHA and VA Loans.