Mortgage relief following a natural disaster may include a moratorium on foreclosure sales, suspension of foreclosure eviction, suspension of credit reporting, suspension of late charges, mortgage forbearance, loss mitigation options, and the distribution of insurance proceeds or other insurance-related assistance. The relief available will vary depending upon the relevant investor of the mortgage.
This section includes information that is generally applicable to all disasters. Federal agencies have often imposed additional mortgage guidance tailored to specific disasters. When faced with representing borrowers in a disaster, watch for disaster-specific updates.
The most important initial step an advocate should take to assist a client facing a disaster-related hardship is to determine the relevant investor. The Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, have created online loan lookup tools to help identify loans they own or guarantee.98Borrowers with FHA-insured loans may be able to identify the status from the loan documents, their mortgage statements, or closing documents. VA-guaranteed loans are generally clear from the text of the mortgages and notes. The United States clearly identifies itself as the lender for USDA direct loans, and the USDA services these loans through its national servicer. The most challenging loan type to identify is a USDA guaranteed loan, because it generally has no specific loan language. Advocates should review the HUD-1 settlement statement and any attachments to the note to see if the loan is guaranteed by the USDA.
In helping borrowers identify the proper loss mitigation options per investor type, advocates should use the Request for Information (RFI) under RESPA to identify the type of loan, available loss mitigation options, and the process for accessing loss mitigation.99The RESPA Notice of Error (NOE) provides an enforceable means to ensure that the servicer implements the appropriate option. Sections 3.3.4, supra, (RFI) and 3.3.3, supra, (NOE) cover the mechanics and uses of RFIs and NOEs in depth.