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Homeowners' Rights in a Natural Disaster

Last Updated On: 6/30/2016 12:18:15 PM

Do I have to pay my mortgage even if my home was destroyed or I cannot live in it right now?

Yes. However, contact your lender immediately, as many lenders will allow disaster victims to delay or skip payments for a few months. Most mortgage company web sites contain information for disaster victims including special hot-line numbers. Always contact your mortgage company for specific instructions.

What if I cannot afford to pay my mortgage right now?

Always contact your mortgage company and ask them what you should do. If your mortgage is FHA insured or subject to similar federal regulation, you may be entitled to reduced or suspended payments and your lender is required to inform you of that.

If your monthly mortgage payments include an amount for insurance and taxes, please be sure and ask your mortgage company if payment of insurance premiums and taxes will be deferred as well and how they anticipate these payments will be handled after the deferral period.

What can my lender do if I do not pay my mortgage?

The lender can file for foreclosure on your home. You will receive a written foreclosure notice. Nonpayment may also be reported to credit agencies that will seriously affect your ability to rebuild your life. Even if you had insurance, if the amount the insurance company pays is less than what you owe for your mortgage, you are still responsible for paying the difference. You should also contact legal counsel to determine other legal options. For instance, you might be able to file Chapter 13 bankruptcy.

What if my home is destroyed and I have no insurance?

File a claim with FEMA. Contact FEMA at 1-800-621-FEMA or www.fema.gov to make a claim within 60 days of the declared date of the disaster. You may be able to deduct some of your loss on your federal income tax return for the current year. Only major losses normally result in tax savings. Check on the IRS web page at www.irs.gov and click on the disaster relief information for further details.

I have insurance. How does that affect my mortgage payments?

You must call your insurance company immediately and report your loss. The West Virginia Offices of the Insurance Commissioner's website has good information about dealing with your insurer and who to contact.  

You are responsible for paying your mortgage payments even if you are pursuing a claim on your insurance unless your lender agrees otherwise. Be aware that your policy may provide you with living expenses while your home is unlivable. Check with your insurer.

Further, if your home is being repaired, and the insurance company is paying for the repairs, you are still responsible for paying the mortgage unless you make another arrangement with your lender.

What if insurance does not cover all my losses and expenses?

File a claim with FEMA within 60 days of the declared date of the disaster.

What if the amount of money FEMA paid me does not cover my losses?

You may appeal any decision. Explain in writing why you think the amount or type of assistance is not correct. Include your FEMA registration number. Sign and date the letter and mail within 60 days of the date on the letter from FEMA with the decision to FEMA-Individuals & Household Program, National Processing Service Center, P.O. Box 10055, Hyattsville, MD 20782-7055. You can fax your appeal letter to: 1-800-827-8112 ATTN: FEMA.

What type of assistance does FEMA provide?

Through the Individuals and Households Program, FEMA generally offers financial assistance for temporary housing; repairs to make a house safe, sanitary, and functional; replacement housing; replacement personal property; transportation; and moving and storage. The funds are tax-free, not counted as income for other benefit programs, and are exempt from garnishment. Keep receipts for three years.

What happens if the government condemns my house?

It is unlikely that you will be paid the value of your house. Check with FEMA to see if there are any programs to help you if your house is condemned. Keep in mind that the land on which your house sits has value even if no one is permitted to live in the house.

What if a relative and or extended family also lived with me before the disaster?

FEMA policy restricts assistance to only one claim per household. However, where families are forced into separate households after the disaster, both heads of households should file claims. You have a right to appeal any decision. Please contact legal services for assistance as soon as possible.

CHECKLIST: CALLS TO MAKE

  • FEMA
  • Mortgage company/lender (Get Policy)
  • Insurance company (Get Policy)
  • Electric and Gas providers
  • Phone company
  • Water company
  • Cable company
  • Homeowners/Condo Association

I am worried my lender will foreclose on me, do I have other options?

Always start by contacting your lender. Mortgage lenders and servicers may provide relief from foreclosure by offering flexible loss mitigation options to borrowers following a natural disaster. Possible relief options include:

  • Loan modification
  • Temporary suspension or reduction in payments
  • Waiver of late payments, and/or
  • Suspending delinquency reporting to credit bureaus.

What should I do if I have received a written Notice of Foreclosure?

If you have received a written foreclosure notice as a result of a disaster-related financial hardship, you may be eligible for Federal Emergency Management Agency (FEMA) assistance to help with mortgage payments. You must file an application for FEMA assistance to receive these benefits. Applications for assistance can be found at www.fema.gov.

Certain kinds of Federal Loans have special foreclosure protections. Check to see if your lender is listed below to see if you might qualify for any additional protections:

Federal Housing Administration (FHA) Loans:

The U.S. Department of Housing and Urban Development (HUD) provides a 90-day moratorium on foreclosures of FHA-insured home mortgages following natural disasters, so long as the property is:

  • Within the boundaries of a presidentially declared disaster area, and
  • The property was directly affected by the disaster.

This time period may be extended if the disaster affects a large area, or is especially severe.

If your ability to make monthly payments toward your FHA-insured mortgage loan has been impaired by a federally declared disaster, you should apply for a forbearance with your mortgage loan servicer. Servicers may not refer a loan to foreclosure or conduct a scheduled foreclosure sale if you have requested consideration and are being evaluated for a federally declared disaster forbearance plan.

To find out if your loan is FHA insured, call your loan servicer and ask if your loan is a FHA loan.

Fannie Mae and Freddie Mac Loans

Fannie Mae and Freddie Mac implement a 90-day foreclosure sale suspension immediately following a natural disaster if the property is within a federally designated disaster area.

To find out if Fannie Mae owns your loan, go to http://knowyouroptions.com and click on “Loan Lookup” in the upper-right corner. To find out if Freddie Mac owns your loan, go to https://ww3.freddiemac.com/corporate.

Veteran’s Affairs (VA) Loans

During times of natural disasters, the VA encourages loan holders and servicers to

  • Establish a 90-day moratorium on initiating new foreclosures, and
  • Help individuals affected by a natural disaster by offering forbearance or modification of veterans’ loans.
This is general legal information. For guidance about your situation, talk to a lawyer.