As Hawaii continues to be ravaged by wildfires, Fannie Mae and Freddie Mac are both reminding homeowners and mortgage servicers of immediate relief options for those impacted by the tragic wildfires in Maui.
What started as just brush fires on the state’s biggest islands, Hawaii and Maui, turned deadly by the middle of last week, with nearly least 100 confirmed dead, and the number missing and unaccounted for at approximately 1,300. The death toll makes the fire damage one of the worst natural disasters in the state’s history, and one of the nation’s deadliest wildfires since a blaze in northeast Minnesota killed hundreds of people in 1918.
According to CNN [1], more than 2,200 structures have been destroyed or damaged by date from the wildfires, with 86% of them residential homes.
CoreLogic estimates [2] that approximately 3,100 single- and multifamily residential properties with a combined reconstruction value (RCV) of $1.3 billion are within three preliminary wildfire perimeters on Maui. The greatest concentration of damage was reported in Lahaina, a town on the island’s western coast. Flames burned the Baldwin House, the oldest home on Maui, as well as many other homes and businesses. According to a County of Maui release [3], 271 structures were damaged or destroyed in Lahaina.
Freddie Mac’s forbearance program provides homeowners immediate mortgage relief for up to 12 months without incurring late fees or penalties.
“The safety and well-being of those impacted by the historic wildfires in Hawaii is our top priority,” said Cyndi Danko, SVP and Chief Credit Officer, Single-Family, Fannie Mae [4]. “Once feasible, we encourage homeowners facing hardship due to the wildfires to contact their mortgage servicer to discuss forbearance options as soon as possible. Both homeowners and renters can learn more about disaster relief resources, including personalized support, by contacting Fannie Mae’s free disaster recovery counseling services.”
Under Fannie Mae’s guidelines for single-family mortgages impacted by a natural disaster:
- Homeowners may request mortgage assistance by contacting their mortgage servicer (the company listed on their mortgage statement) following a disaster.
- Mortgage servicers are authorized to offer a forbearance plan for up to 90 days–even without establishing contact with the homeowner–if the servicer believes the home was affected by the disaster.
- Homeowners affected by a disaster are often eligible to reduce or suspend their mortgage payments for up to 12 months by entering into a forbearance plan with their mortgage servicer. During this temporary reduction or pause in payments, homeowners will not incur late fees and foreclosure and other legal proceedings are suspended.
- Following a forbearance plan, there are a number of options available to potentially help homeowners catch up on missed payments, including Disaster Payment Deferral.
- In addition, homeowners currently on a COVID-19-related forbearance plan who were subsequently impacted by a natural disaster may still be eligible for assistance and should contact their mortgage servicer to discuss options.
Bill Maguire, Freddie Mac’s VP of Single-Family Servicing Portfolio Management [5], added, “Once out of harm’s way, Freddie Mac and our partners stand ready to provide immediate mortgage relief to individuals and families impacted by these terrible wildfires.”
Freddie Mac's disaster relief options are available to homeowners who have been impacted by an eligible disaster. When they are back on their feet, homeowners have several options to make up the missed payments, including additional forbearance, if needed, including:
- Reinstatement: The option for a lump sum payment is available, but never required, if the homeowner’s loan is owned by Freddie Mac.
- Repayment plan: Homeowners pay more each month on top of their existing mortgage payment to make up the missed payments.
- Payment deferral: This option is available if homeowners can resume making their regular monthly payment. With payment deferral, homeowners become immediately current on their mortgage and missed payments are added to the end of the mortgage term without interest or penalties.
- Loan modification: If a homeowner is facing a long-term financial hardship but can make a reduced mortgage payment, a modification may be the best option.
Freddie Mac also reminds servicers that its disaster relief options are available to affected homeowners outside the declared disaster areas if their home incurs a disaster-related insured loss that impacts their ability to make their mortgage payment.