Fannie Mae and Freddie Mac on Tuesday extended their disaster-relief policies to borrowers whose homes were damaged by Hurricane Sandy.
The aid applies to property owners living in towns and cities along the eastern United States that have been declared disaster areas by President Barack Obama.
Millions of people were left reeling in the aftermath of the super storm that made landfall on Monday and resulted in flooding, wide-spread power outages and deaths.
The historic storm caused government offices and U.S. financial markets to close on Monday and Tuesday. Preliminary estimates show that damage could exceed $10 billion.
"Freddie Mac has authorized the nation's mortgage servicers to provide a full range of mortgage-relief options to affected borrowers with mortgages owned or guaranteed by Freddie Mac," said Tracy Mooney, senior vice president of single-family servicing and real estate owned at Freddie Mac.
One of the options for people with Freddie Mac-backed loans is forbearance on mortgage payments for up to one year. The government-backed mortgage lender has told its servicers to offer forbearance, which lets a borrower reduce or suspend payments on a loan for a specific amount of time. This is done on a case by case basis.
Freddie Mac said it "strongly encourages" servicers to help affected borrowers with Freddie Mac-owned loans by suspending foreclosure and eviction proceedings for up to 12 months, waiving assessments of penalties or late fees against borrowers with disaster-damaged homes and not reporting forbearance or delinquencies caused by the disaster to credit bureaus.
Fannie Mae said its policy with mortgage servicers, updated in 2009, allows borrowers to enter forbearance for up to 90 days and perhaps even longer upon further appraisal. Fannie Mae said servicers were reminded of the existing guidelines on disaster relief in light of the recent storm.
"Servicers can evaluate for additional forbearance if needed. They can automatically do up to a 90-day forbearance plan, then determine if additional time is needed," said Andrew Wilson, a Fannie Mae spokesman.
Fannie and Freddie, the two largest sources of housing money, were taken over by the government in September 2008 during the financial crisis.
The government-controlled companies do not directly make loans. Instead, they buy mortgages from lenders and repackage them as securities for investors.
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