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How Hurricane Irma and Harvey will Affect Mortgage Loans

Residents of Texas and Houston are counting their losses after the hit of Hurricane Harvey and Irma. Estimates of the cost of Hurricane Harvey’s damage could hit $190million while Hurricane Irma’s damage could cost $100 billion.

It is not just destruction of properties that is causing distress among these residents. Estimates prove that as many as 300,000 borrowers could become delinquent on their mortgage loans because of the effects of Hurricane Harvey.

The number is much higher than predicted as more homes have been hit by the catastrophe, prompting the designation of new disaster zones. So as homeowners in Houston struggle to rebuild, they may also have a hard time making payments on their mortgages.

New estimates suggest that about 160,000 people could become seriously delinquent on their loans. This means more than 90 days past due; a duration which would normally prompt banks to initiate foreclosure proceedings.

Banks That Have Announced Hurricane Irma Relief Efforts

The number of mortgaged properties found within the disaster zones is 1.18 million. The following banks have announced relief efforts for those affected:

  1. Bank of America;
  2. JPMorgan Chase & Co.;
  3. Wells Fargo;
  4. EverBank;
  5. Sun Trust;
  6. Citi;
  7. Regions Bank.

The relief services offered at these banks include waiving late payments or delay payments for up to 90 days without penalty. You still need to go through the terms offered by the bank and fully understand them. Interest will accrue in many cases.

A government-backed agency that own myriads of mortgages, Fannie Mae, has authorized lenders to either reduce or suspend payments. This decree should apply to all single-family mortgages with immediate effect for up to 90 days.

Are You Eligible For Forbearance?

You still need to contact your servicer since forbearance is not automatic. Each of a borrower’s case is unique. In some cases, deferred payments could either be added to the end of the loan. Another possible scenario is when deferred payments would become due according to a payment plan.

Many lenders are offering financial relief for mortgage borrowers living in Hurricane-battered areas of Florida and Texas. Borrowers may enjoy certain privileges from lenders which include putting mortgage payments on hold or help in rebuilding a damaged home.

However, beware of scammers on social media platforms trying to prey on homeowners in dire financial need after the hurricane’s aftermath.

How to Find Assistance without Falling in the Trap of Scammers

  1. Call your lender directly; this is the only way of confirming that an assistance offer is for real. Don’t be quick to ‘apply’ for mortgage relief assistance through links found on spam emails.
  2. Know your options; many homeowners who are directly affected by Hurricane Irma and Harvey are eligible for at least 90 days of forbearance on a mortgage. Delinquency or late payment will not be reported to the major credit reporting bureaus.
  3. Consult government websites; if you are in a disaster area as declared by the Federal Emergency Management Fund (FEMA) your loan is likely eligible for relief programs.

Forbearance programs offered by the government do not mean being forgiven of the mortgage debt you owe. The deferred amount will still be owed.