Here’s the 'hard reality' homeowners face with disasters: business reporter

28 January

In Los Angeles County, countless residents have lost their homes because of historically destructive wildfires.

Southern California, with its arid climate, has long been vulnerable to wildfires and droughts. But according to many scientists, climate change is making natural disasters both more intense and more common — from wildfires in Los Angeles County to hurricanes in Florida to tornados in Kansas and Oklahoma.

Many Los Angeles County residents whose homes burned to the ground are paying off mortgages. And according to CNN Business' Jeanne Sahadi, the fact that those homes "no longer exist" doesn't automatically mean that the mortgage agreements will be discontinued.

"Wildfires, raging floods, tornadoes and hurricanes can obliterate your home, but not your mortgage," Sahadi explains in an article published on January 27. "The hard reality is that even when you live in a federally declared disaster area — like those ravaged by wildfires in Los Angeles County or battered by hurricanes in North Carolina and other states — you still will owe the bank whatever is left on your loan, even though your house no longer exists or is uninhabitable."

Sahadi adds, "There are, however, some disaster-related relief programs that can temporarily reduce or suspend your mortgage payment for up to a year and sometimes beyond, depending on your circumstance."

The CNN business reporter urges homeowners who have suffered a major disaster to contact their mortgage services immediately.

"The types of mortgage relief a servicer can provide will be governed in part by the entity that backs your mortgage or holds it in its portfolio," Sahadi notes. "Usually, that's an individual bank or a government agency: e.g., Fannie Mae, Freddie Mac, the Federal Housing Administration, the Veterans' Administration, etc…. In the case of Fannie Mae, for instance, servicers are expected to offer relief to borrowers in cases of financial hardship, even if they'd been delinquent prior to the disaster, said Jenise Hight, vice president of the agency's single-family credit risk policy."

Sahadi continues, "Typically, with a federally backed loan, you're likely to be offered forbearance of between three to 12 months, during which your mortgage payments will be suspended or reduced."

Read Jeanne Sahadi's full CNN Business article at this link.

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