"The trees got blown over and the wind took out our fence and ripped the lid off of our spa," Zephyrhills homeowner Janet Patterson explained, as she showed us damage left behind by Hurricane Irma.
Patterson is one of many Florida homeowners taking advantage of disaster relief offered by mortgage companies in the wake of Hurricane Irma.
"My mortgage payment was due on the 15th. Well, I had no electricity, no Internet, so I had no way to pay it," she said. "I didn’t want it to ding my credit, so I called them."
Patterson was thankful to hear her lender, Ditech, was offering homeowners impacted by the hurricane several options to help them through this tough time.
Relief Benefits offered
The main disaster benefits many mortgage companies are offering include:
- Waiving late fees and penalties
- No reporting to the credit bureaus
- Suspending payments for several months (known as forbearance)
- Loan modifications
Patterson received a packet in the mail with multiple options to consider.
"They're trying to help you as much as possible to avoid foreclosure," she said.
Proceed with caution
If you do take advantage of the hurricane relief benefits, veteran real estate agent Vince Arcuri says be careful and make sure you really need it.
"It’s not a free lunch. They’re not waiving it and you never have to pay it back," he explained. "It's very tempting right now, this time of year, coming into the holidays to say, 'Hey, wouldn’t it be nice not to make a mortgage payment until January?' But then, the grim reaper is gonna be there with his hand out saying, 'Where's my money?’ It's not gonna be a very good start to your 2018."
Don't just skip a payment and assume your mortgage company is participating in disaster relief. Private lenders are under no legal obligation to offer assistance, even though most are doing it. Be sure to call to find out what exactly your lender is offering.
"You could get yourself in trouble skipping a mortgage payment. You're gonna find yourself in a foreclosure situation if you don't clarify it with your lender before skipping a payment of any kind," Arcuri said.
Devil is in the details
Be sure to clarify the details of any assistance your mortgage company is offering, so there is no misunderstanding. Patterson's lender agreed to waive her payments for three months, but she still had to pay the insurance and interest; and they would not tack her missed payments onto the end of her mortgage.
"Whatever portion I did not pay, needed to go back in January, when my January payment came. I had to pay it all back at once," Patterson explained. "You lump that all together, three months plus, and that's a big nut to crack for a lot of people."
After your hurricane mortgage relief ends, if you can't catch up on your payments all at one time, some lenders are offering homeowners the option of a refinance or modification. That can be helpful, but be careful, if you've been in your home and paying on your current mortgage for more than five years. That's the crossover point on your loan for when you actually start paying down more of the principle, instead of mostly interest. Doing a refi or modification essentially resets your mortgage, and you start all over again.
"You're going to want to make sure the new interest rate they're giving you is low enough to make it worth your while," Patterson, who is also a real estate agent, explained. "Do the math and make sure it offsets what you’re going to be losing."
If you have a government backed FHA loan or government sponsored Fannie Mae or Freddie Mac loan, the assistance being offered is even more generous than private lenders. One of the biggest perks for those loans is that you won't have to catch up on all your payments at once.
"A lot of people have lost their jobs, you know. Their whole lives have been uprooted," Patterson said. "I think it's a wonderful thing they're doing, because some people really do need the help."
Getting disaster mortgage relief at a time like this can be a huge help, but be sure you understand the terms of what your lender is offering, so you don't create a bigger problem and cost yourself a lot more money in the long run.