Disaster Relief Policies
Freddie Mac is committed to providing assistance to borrowers – especially when their homes have been impacted by disaster-related events. We are prepared to quickly respond with effective relief measures to help borrowers and guidance for Sellers and Servicers in the aftermath of a disaster.
When a disaster strikes, borrowers whose homes have been damaged may experience disruptions in their ability to make on-time mortgage payments. Therefore, we require Freddie Mac Sellers and Servicers to be responsive to any requests for assistance from affected borrowers using options available through our Single-Family Seller/Servicer Guide (Guide).
In addition to assisting borrowers who are disaster victims, Servicers must begin determining the disaster's impact on the mortgaged properties. Sellers should review the Guide and their procedures for inspecting and recertifying a mortgaged property's value, condition, and marketability when a major disaster occurs. Most importantly, we rely on both Sellers and Servicers to determine the number of impacted properties and the extent of damage to each.
Freddie Mac Policies for Major Disaster Declarations
When disaster strikes and causes extensive damage, the President of the United States may issue a Major Disaster Declaration for certain localities and authorize federal Individual Assistance programs for affected individuals and households.
In the event a declaration is made, Sellers and Servicers should follow these steps:
Identify the Localities Designated in the Major Disaster Declaration
Look for Special Freddie Mac Announcements
Consult Guide Chapter 68 for Disaster Policies
To assist borrowers with Freddie Mac-owned mortgages who reside in the designated areas, Servicers must immediately begin following the disaster relief requirements outlined in Guide Chapter 68, which include:
- Placing an impacted borrower, based upon the borrower’s specific circumstances (such as delinquency level, whether Quality Right Party Contact was achieved or a complete Borrower Response Package received, and whether the borrower needs assistance) into a forbearance plan for up to 6 months, resulting in suspension of collection and foreclosure proceedings.
- If the Servicer determines that additional forbearance is necessary, and depending again upon the borrower’s specific circumstances, Servicers may offer borrowers up to an additional six months of forbearance (not to exceed 12 months in aggregate).
- Not assessing late charges for, or reporting to credit repositories, impacted borrowers who, as a result of an Eligible Disaster, have been placed on a forbearance plan or who are paying as agreed on a Trial Period Plan or repayment plan.
- Providing transition assistance from the forbearance plan due to an Eligible Disaster into an appropriate relief or workout option to cure the delinquency.
- Providing requirements to evaluate borrowers who were performing on a Trial Period Plan prior to the Eligible Disaster with the opportunity to transition into another Trial Period Plan at the end of the forbearance period.
- Providing information regarding options for local, state, or federal disaster assistance.
- Providing additional assistance for borrowers who were current or less than 31 days delinquent at the time of the disaster, such as the Capitalization and Extension for Disaster Relief Modification (“Disaster Relief Modification”) and special requirements for the Streamlined Modification.
- Permitting Servicers to use their discretion in the release of insurance funds to borrowers who are less than 31 days delinquent at the time of a disaster and have suffered less than a total or near total loss to help expedite repairs.
Review Special Requirements for Borrowers Impacted by an Eligible Disaster
- Is designed for borrowers whose hardship resulted from an Eligible Disaster and who are able to resume making their pre-disaster mortgage payment, but who are unable to reinstate the mortgage or cure the delinquency with a traditional repayment plan.
- Provides a modification that extends the term of the mortgage only as necessary to get the borrower to a monthly payment that is equal to, or slightly less than, their existing payment. Eligible borrowers must complete a Trial Period Plan. For more information on the Disaster Relief Modification and Eligible Disasters, please refer to Bulletin 2013-15.
- See Guide Section B65.12.2 to learn more about the Disaster Relief Modification.
There are many available relief options for borrowers who were current or less than 31 days delinquent at the time of disaster:
- Review Guide Chapters B65, Workout Options, most notably the Streamlined Modification, and C65, Home Affordable Modification Program, Trial Period Plan Eligibility.
Refer to Guide Exhibit 52 for Assistance Programs
Guide Exhibit 52 details information regarding FEMA, Small Business Administration, and Federal Housing Administration assistance programs for residents of areas designated in a Major Disaster Declaration. These assistance programs are designed to supplement state or local aid that may be offered.
Review the Guide for Seller Responsibilities
- Be prepared to address property damage as a result of a disaster, per Guide Section 44.2(c).
- Review Guide Section 22.20 about circumstances that adversely affect the value of a mortgage, including condemnation.
- Review Guide Section 44.2(a), which requires Sellers to warrant that improvements must be undamaged by fire, windstorm, and other perils.
Review Information on Insurance Loss Settlements after an Eligible Disaster
- For borrowers who were less than 31 days delinquent at the time of the Eligible Disaster, Servicers are required to release insurance funds in accordance with the requirements of Guide Section 68.3 to help expedite property repairs.
- For borrowers who were 31 or more days delinquent at the time of the Eligible Disaster, Servicers are required to release insurance funds in accordance with the requirements of Guide Section 58.10.
- Insurance loss settlements that are intended for non-structural losses must be released to the borrower without delay.
- Review the Mortgages Affected by Disaster for Servicers Tutorial (50 min. self-paced recording, available 24/7) to learn more.
- Visit Freddie Mac's Learning Center Web page for additional information on Freddie Mac training programs and references tools.
Are You a Homeowner?
As soon as you know that you will not be able to make your mortgage payment on time as a result of a disaster, immediately contact your Servicer because help may be available to you. Learn more about alternatives to foreclosure.