The U.S. Department of Housing and Urban Development (HUD), Fannie Mae, and Freddie Mac have all set up response strategies to aid homeowners that were directly affected by Hurricane Sandy's devastation. Both strategies are intended to give homeowners in the most devastated areas—New York and New Jersey—a much needed break while they assess their situations and get their lives back in order.
The Government Sponsored Enterprise (GSE) has encouraged its servicers to help all borrowers with Freddie Mac owned loans that were directly impacted by the storm. Freddie has requested that its servicers suspend foreclosure and eviction proceedings for up to 12 months, waive assessments of penalties or late fees against borrowers with disaster-damaged homes, and not report forbearance or delinquencies caused by the disaster to the nation’s credit bureaus. The GSE has also advised homeowners to contact their mortgage servicer to find out more about their current options.
Fannie Mae issued a statement that said its servicers, “may temporarily suspend or reduce a homeowner’s mortgage payments for up to 90 days if the servicer believes a natural disaster—such as Hurricane Sandy—has adversely affected the value or habitability of the property, or if the natural disaster has temporarily impacted the homeowner’s ability to make payments on their mortgage.” Fannie also said that its servicers may grant this temporary relief even if they can’t immediately reach the impacted homeowner, but the GSE expects its servicers to contact any affected homeowners within 90 days to see if additional assistance is needed.
HUD Secretary Shaun Donovan announced that the Department will speed federal disaster assistance to New York and New Jersey to provide support to homeowners and low-income renters that were forced from their homes due to Hurricane Sandy. HUD also announced that it will provide foreclosure relief and mortgage insurance to hurricane-impacted homeowners in New York and New Jersey as well, and will do both of these by:
- Offering New York, New Jersey, and other entitlement communities the ability to re-allocate existing federal resources toward disaster relief – HUD's Community Development Block Grant (CDBG) and HOME programs will give the states and their communities the flexibility to redirect millions of dollars to address critical needs, including housing and services for disaster victims.
- Grant immediate foreclosure relief – The Department granted a 90-day moratorium on foreclosures and forbearance on foreclosures of Federal Housing Administration (FHA) insured home mortgages.
- Making mortgage insurance available – HUD's Section 203(h) program will provide FHA insurance to disaster victims who have lost their homes and are facing the overwhelming task of rebuilding or buying new home.
- Making insurance available for both mortgages and home rehabilitation – HUD's Section 203(k) loan program will allow those who have lost their homes to either finance the purchase of a new home or refinance their existing home along with its repair through a single mortgage. It also will allow homeowners who have damaged houses to finance the reconstruction of their existing homes.
- Offering Section 108 loan guarantee assistance – HUD will offer state and local governments federally guaranteed loans for housing rehabilitation, economic development, and the repair of public infrastructure.