Freddie Mac Extends Disaster Assistance to Colorado Flood Victims

As it did following the devastation of Hurricane Sandy, Freddie Mac has made the full menu of its mortgage relief policies available to borrowers in the Colorado area.  The state has been hit by days of flooding that, according to the latest news reports, are likely to have destroyed 11,000 homes.

Freddie Mac's disaster relief policies enable servicers to help borrowers with homes in presidentially declared Major Disaster Areas where federal Individual Assistance programs are being made available.  Under the directive issued by Freddie Mac today servicers can place borrowers with properties affected by the flooding on forbearance and suspend foreclosures for up to 12 months.  This forbearance need not be reported to the nation's credit bureaus.  Servicers can waive late fees assessed against borrowers whose homes were damaged by the disaster.  Evictions and lock-outs can also be suspended for up to 90 days.

When forbearance ends, a new Freddie Mac option allows servicers to add missed mortgage payments to the outstanding loan balance and extend the term of the loan in order to keep the monthly mortgage payment essentially unchanged. 

Freddie Mac is also reminding servicers to consider Freddie Mac's standard relief policies, including forbearance or mortgage modifications, for borrowers who work in eligible disaster areas but live in unaffected areas.

Tracy Mooney, Senior Vice President of Single-Family Servicing and REO at Freddie Mac said, "Freddie Mac is urgently reminding the nation's mortgage servicers about the full range of mortgage relief options they can provide to affected borrowers with mortgages we own or guarantee, including forbearance on mortgage payments for up to one year. We strongly encourage borrowers to contact their servicers, who are fully authorized to work with them on a case-by-case basis."

Fannie Mae is expected to issue a similar emergency declaration.