Freddie Mac has confirmed that homeowners and mortgage servicers impacted by Hurricane Ida are eligible for disaster relief options.
Hurricane Ida made landfall in Louisiana Monday, leaving about one million homes and businesses without power. Federal officials said it could be weeks before power is fully restored.
The storm slammed the Gulf Coast as a Category 4 hurricane, and continued moving through Mississippi as a tropical storm. Ida has caused severe flooding, ripped roofs off buildings, and destroyed power lines.
For homeowners, the impact could be catastrophic. A statement from the National Weather Service in New Orleans warned that parts of southeast Louisiana “uninhabitable for weeks or months.”
On Tuesday night, Gov. John Bel Edwards (D-La.) urged those forced to evacuate to stay away from their storm-ravaged communities until order can be restored.
“Many of the life-supporting infrastructure elements are not present, they’re not operating right now,” Edwards said in a news conference in LaPlace. “So if you have already evacuated, do not return.”
But making mortgage payments may not have to be on their list of worries. In a statement, Freddie Mac told homeowners impacted by Ida to take advantage of available disaster relief.
“Once safe, homeowners whose homes are impacted should contact their mortgage servicer—the company they send their monthly mortgage payments to— as soon as possible to talk about available mortgage relief options,” said Bill Maguire, Freddie Mac’s Vice President of Single-Family Servicing Portfolio Management.
“This also includes homeowners whose places of employment have been impacted resulting in a financial hardship that prevents them from being able to make their monthly payment.”
Freddie Mac’s disaster relief options are available to homeowners whose homes or places of employment are located in presidentially-declared Major Disaster Areas. President Biden approved a Major Disaster Declaration for Louisiana yesterday.
Research shows that natural disasters devastate the finances of local residents, which directly impacts mortgage payment rates. “Within three months, there’s a huge spike in serious delinquency rates on mortgages. And it happens even on those properties that didn’t have any damage,” said CoreLogic Chief Economist Frank Nothaft.
Serious property destruction also impacts home sales and rentals, causing price spikes in surrounding areas.
Freddie Mac’s short-term forbearance options can provide relief from mortgage payments for up to 12 months without fear of foreclosure. When homeowners are ready to restart payments they have the following options:
- Reinstatement: The option for a lump sum payment is available, but never required, if the homeowner’s loan is owned by Freddie Mac.
- Repayment plan: Homeowners pay more each month on top of their existing mortgage payment to make up the missed payments.
- Payment Deferral: Homeowners become immediately current on their mortgage and missed payments are added to the end of the mortgage term without interest or penalties.
- Loan modification: For homeowners who are facing a long-term financial hardship but can make a reduced mortgage payment.