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Natural Disaster Relief

Freddie Mac is committed to providing Sellers and Servicers with the guidance and support necessary to help borrowers mitigate the impacts of natural disasters.

Important Resources

For Servicers:

For Sellers:

Note: These Bulletins include all areas designated as FEMA disaster areas, and therefore also apply to the recent California and Pacific Northwest wildfires.

Disaster Relief Policies

When a disaster strikes, borrowers whose homes or places of employment have been impacted 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) and/or Guide Bulletins with temporary requirement changes tailored to address recent disasters.

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 recent Guide Bulletins) 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 the Federal Emergency Management Agency may authorize federal Individual Assistance programs for affected individuals and households within certain parts of the major disaster area.

In the event such a declaration is made, Sellers and Servicers should follow these steps:


Identify the Localities Designated in the Major Disaster Declaration

To find a list of eligible counties, parishes, and municipalities, visit the Federal Emergency Management Agency's (FEMA) web site .

Consult Guide Chapter 8404 and Guide Bulletins for Servicing Disaster Policies

To assist borrowers with Freddie Mac-owned mortgages who reside or work in the designated Eligible Disaster Areas, Servicers must immediately begin following the disaster relief requirements outlined in Guide Chapter 8404 (and/or applicable disaster-related Guide Bulletins), which include:

  • Placing an impacted borrower, based upon the Servicer’s discretion, into a forbearance plan by assessing the extent of the property damage and the financial impact to the borrower.
  • Not assessing late charges for, or reporting to credit repositories, impacted borrowers who 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 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.
  • Providing special requirements in certain disaster-related Bulletins that are not included in the Guide as noted below.

Special Requirements for Transition from Forbearance Plan

As an impacted borrower is nearing the end of their disaster forbearance plan, determine if the borrower is able to cure the delinquency via a reinstatement or repayment plan. If the borrower is unable to do so, then the Servicer must determine whether the borrower is eligible for the Extend Modification for Disaster Relief (Extend Modification) or the Capitalization and Extension Modification for Disaster Relief (Disaster Relief Modification). These modifications:

  • Are 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.
  • Provide a modification that extends the term of the mortgage only as necessary to get the borrower to a monthly payment that is as close to their existing payment as possible. Eligible borrowers must complete a Trial Period Plan.

The modifications are similar to each other, but there are some key differences for borrowers:

  • The Extend Modification does not provide for capitalization of arrearages, including tax and insurance advances. Borrowers receiving the Extend Modification must pay such advances either in a lump sum or over a 60-month repayment period, resulting in an increased monthly principal, interest, taxes, insurance, association dues and escrow shortage payments (PITIAS) for that time period. For more information on the Extend Modification, please refer to Guide Bulletin 2017-25.
  • The Disaster Relief Modification does allow for capitalization of arrearages, which will include delinquent interest. When interest and non-interest arrearages are capitalized, it results in an increase to the borrower’s unpaid principal balance (UPB). As a result, subsequent interest calculations will be based on the higher UPB and some additional interest will be paid by the borrower over the life of the loan. For more information on the Disaster Relief Modification and Eligible Disasters, please refer to Guide Chapter 8404 and Guide Section 9206.4.
If a borrower is ineligible for either the Extend Modification or the Disaster Relief Modification and the borrower has become 90 days delinquent and is otherwise eligible, the Servicer should make a streamline offering for a Freddie Mac Flex Modification®

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

Sellers should:
  • Be prepared to address property damage as a result of a disaster, per Guide Section 5601.2(c).
  • Review Guide Section 4201.13 about circumstances that adversely affect the value of a mortgage, including condemnation.
  • Review Guide Section 5601.2(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 current, or less than 31 days delinquent, at the time of the Eligible Disaster, Servicers are required to release up to $40,000 of insurance funds in accordance with the requirements of Guide Section 8202.11 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 8202.11.
  • Insurance loss settlements that are intended for contents losses or off-residence living expenses must be released to the borrower without delay.
  • Refer to Guide Bulletin 2017-25 for temporary insurance loss settlement requirements for all Eligible Disaster Areas on or after August 25, 2017.

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