How does Sandy affect the Mortgage Market?
Updated on 6/18/2013
by Sari R.
For many homeowners, living in the aftermath of Sandy is proving to be quite a struggle. However, several major lenders and government agencies have been rolling out programs that would ease mortgage payments. For example, Fannie and Freddie are going to offer borrowers with damaged homes assistance, such as delaying mortgage payments for up to a year. All homeowners who were affected by Sandy receive 90 days forbearance but need to provide photos of damage for any additional days.
Fannie and Freddie will also postpone foreclosures, waive late fees and refrain from reporting late payments to the credit bureaus. Private lenders will postpone mortgage payments for 90 days for customers who request it.
Those who have been affected by Sandy should remember to call their mortgage servicer and ask for assistance as opposed to waiting for lenders to make the first move.
Many homeowners who were in the final steps of refinancing now find themselves in trouble, as Sandy necessitates the need for additional documents stating that the home is in a declared disaster area. This presents a problem for homeowners who are currently without power.
Loan processing itself is delayed since so many banks are closed and without power. If an interest rate lock expires before the bank closes, that customer would be allowed to qualify for the previous interest rate. Home closings have also been postponed by lenders due to reinspections. Lenders want to make sure that they aren’t financing damaged property. Some borrowers have been told that they could send proof that their home wasn’t damaged, but most borrowers have to wait until someone comes and actually inspects their home.
Here are some tips if you’re a borrower who has been affected by Sandy:
· Call your lender ASAP
· Take as many notes as possible during your conversation
· Take care of documentation that is requested as quickly as possible; don’t forget to make copies
· Follow up with your lender a week after the conversation to make sure that what you agreed upon is actually going to happen
· Call credit bureaus and tell them that your house is in a declared disaster area
· If additional assistance is needed, call a counseling agency approved by HUD
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