Checklist: Post-Natural Disaster Mortgage Steps

In the days after a natural disaster has struck, it can be hard to focus your thoughts on restoring financial order to your life. This checklist is designed to guide you step-by-step through the process of understanding your options for your home or for securing new housing.

Get organized
You are going to have a lot of information flowing back and forth in the coming weeks and month. Invest in a filing system, even if it just comprised of a few plastic folders from a dollar store. Keep track of all correspondence and what was promised by either party.

Insurance agent(s)
Beginning the claims process will help you achieve resolution faster. If you don’t have a copy of your insurance policy, request one from your provider. If you bought disaster insurance separate from your homeowners policy, make sure to reach out to the provider of that plan too.

If you didn’t have homeowners insurance
If for some reason you didn’t have a homeowners policy at the time of the disaster, you may qualify for help with repairs via the Assistance for Individuals and Households program. If you are in this situation, call 800.621.3362 to see if you qualify for help.

Mortgage servicer
The first task is to make sure the mortgage servicer is aware of the damage to your home or your land. Keep in mind that your responsibility to pay your mortgage doesn’t cease because of the natural disaster. The lender can grant you forbearance on payments, but they are generally not required to. If your lender offers you concessions, make sure to get any agreements in writing with all the details clearly spelled out. Make sure you understand all the particulars of a new agreement before you sign anything.

If you don’t know the name of your mortgage servicer, call the Mortgage Electronic Registration Systems at 888.679.6377 for assistance.

If your loan is backed by the Federal Housing Authority or the Veteran’s Administration, you may be guaranteed certain post-disaster payment protections. Call the Department of Housing and Urban Development (HUD) at 888‐297‐8685 to learn more.

Utilities providers
Contact your gas, electric, water, cable, garbage, etc. service providers to ensure your service is suspended if your home is too damaged to live in.

Federal Emergency Management Agency
Call FEMA at 800.621.3362 to learn about disaster assistance you may be eligible for. If you have an immediate need for new housing, ask about options in your area.

Small Business Administration
Even if you didn’t own a business of any kind, you may be eligible for a disaster assistance loan from the SBA for up to $200,000. This loan is for restoring the home to its original state, or relocating your home to another site if you are unable to obtain a building permit for the previous site.

HUD’s Homeownership Center
If your home was damaged or destroyed in the natural disaster, you may qualify for a zero-down payment, government-insured 203(H) FHA mortgage to rebuild or repair. Call the Department of Housing and Urban Development’s Homeownership Center at 800.225.5342 for more information.

Assess your finances
With the new post-storm financial reality, you may need to prioritize your bills. As best you can, try to complete a budget to make sure you can cover your housing expenses until the situation clears up a bit.

Don’t hurry into bankruptcy
Many people who have experienced a natural disaster quickly file Chapter 13 bankruptcy believing it will help to alleviate the pressure they are facing from creditors. Since Chapter 13 allows you to keep your home – the logic goes – at least you don’t have to worry about your housing for a while. This shortsighted approach can damage your credit long-term when other options were available.

State bar association
In times of disaster, state bar associations often step to the forefront to help victims with their legal concerns. Call 800.285.2221 if you need to find the number of your state’s association.

Beware scams
Anyone who offers you help but asks that you pay a fee or sign over the property to them is just trying to rip you off. Decline their services and report them to your state’s attorney general office.

Also exercise caution with any loans tied to your equity in the home. These high-priced products can result in you losing your home outright.

Monitor your credit reports
Having to endure the natural disaster was bad enough. You shouldn’t have to have your credit damaged too. You can get copies of your three major credit reports for free once a year by calling 877.322.8228 or by visiting www.annualcreditreport.com.

Any negative information added to the report as a result of the disaster should be marked “AU” to signify that it was disaster-related. Contact the credit bureaus – Equifax, Experian and TransUnion – using the contact information on the credit reports to dispute any items you feel should be classified as AU.

Continue to research the available help
Many of the assistance programs for disaster victims come in the months after the destructive event. Make a habit of researching online any programs that have become available to help with payments, repairs, relocation, etc.

You’ve been through a lot. Don’t let the enormity of the situation become too much. Take the process one step at a time and you’ll get through it.

Tips For Talking To A Mortgage Servicer About Avoiding Foreclosure

A recent study found that of people who had lost their home of foreclosure, around half never called their mortgage servicer or lender to discuss options for saving their home. There are potentially plenty of options for saving your home if you just reach out to the mortgage servicer. When you’ve gathered up the necessary documents – refer to BALANCE’s Mortgage Modification Document Checklist – and you’re just about ready to make the call, review the following list to put yourself in place for the best possible shot at working out a way to save your home. After the servicer has told you whether or not they will offer you an immediate modification, use the post-decision information below to follow to continue to navigate the process successfully.

• Contact your servicer immediately as soon as you are aware that there will be a problem making your mortgage payments.
• Keep a log of all contacts that includes date and time of call, person talked to, and what was discussed, requested or offered.
• Start a file of all documentation related to your attempt to keep your home.
• Try to call the servicer when you are close to a fax or scanner and computer with internet connection. This will allow you to send documents quickly and get you closer to resolution.
• Ask to speak with the “Loss Mitigation Department” at the servicer about possible workout options.
• Get a name and phone number for a specific person in Loss Mitigation so you have someone to talk to directly when you call back.
• Make sure you are clear with them about your situation and what you want to accomplish.
• Answer all questions as honestly as possible, since doing so will put you in better position to succeed in the long-term.
• Ask for information on and applications for any workout programs that might assist you.
• Keep a calendar of deadlines from the servicer and meet all the obligations they set forth.
• Contact a certified housing counselor, like the ones at BALANCE, if you want impartial views on the process and your options.
• Be persistent. If you don’t get an answer right away, hound them until you do.
• Don’t agree to anything that you haven’t seen in writing or aren’t sure you can afford. If you aren’t sure, talk with your housing counselor. Don’t be afraid to counteroffer.
• Always respond to calls or letters from the servicer.
• Follow up on requests you have made of the servicer.
•  Any information sent to the servicer should be sent certified mail with delivery confirmation. Keep the delivery confirmation slips in your file.
• Try not to take offense at any suggestions the servicer makes for ways you can cut expenses or generate more income. It is in their best interest to help you stay in the home and they want to make sure they are just exploring all options for doing that.
• Stay in your home during the time you are pursuing a workout on the mortgage, since moving out could disqualify you for certain types of help from the lender.
• Ask what timelines have been set by the servicer for completing a workout and how this relates to possible foreclosure proceedings. Ask if a foreclosure sale date has been set.
• Make sure the servicer is always aware of any changes that have happened in your situation, such as picking up extra income or getting a new job.
•  Ask how many months the servicer considers you behind, and the exact dollar amount they think you owe.
•  If you are not sure, ask if your loan is owned by Freddie Mac or Fannie Mae as there may be additional options available to you if that is the case.

What to do if you’ve been…

Approved for a modification:

• Assume that unless the lender sends you an agreement in writing, the offer is not official.
• Ask when final documents, such as a new mortgage contract, will be mailed to you.
•  Confirm how long you are allowed to review the lender’s offer before it expires.  If it does expire, you will likely have to reapply.
•  When you receive the lender’s offer, check it against your budget to make sure it will work for you. A BALANCE counselor can help with this process.
• Do not be afraid to counter or deny an offer if it doesn’t help your situation. In fact, sometimes you may be doing yourself a disservice by accepting. With most lenders you can only get a loan modification once in a 12 month period. Make it count.
•  Make a copy of any agreement the lender asks you to sign and insist that they sign the agreement as well. Only send signed agreements via certified mail with return receipt.
• If you are told by the lender not to make a payment while their offer is finalized, ask to get a copy of that in writing as confirmation.  Just in case, set aside the money you would have otherwise given to the lender until everything is final.

Declined for a modification:

• Call to confirm the specific option you were being reviewed for and the reason why you were denied.
• Even if you’ve been denied for one option, that doesn’t mean you’re not in review for something else. Ask if your file is in active review and confirm the option the lender is looking at next.
• If you are told it’s due to missing documents, make sure none of the items you sent were rejected. A form could be rejected if it was completed incorrectly. In this case, ask for step-by-step instructions on how to fill it out.
• Ensure that a decision was based on the correct budget. Have the lender confirm the totals for these categories: gross and net income, expenses, assets and property value. Make sure those match your records and the budget you prepared.
• If you were denied for a short sale due to your property’s value, do not pay for an appraisal. Instead, ask your realtor to submit “comps” to the lender based on similar properties in the immediate area.
• Do not reapply for the same option before speaking with your BALANCE counselor. If your case is the same as before, chances are the outcome will be similar. Our counselors can figure the reason you were denied into a plan for next steps.
• If you want to dispute your lender’s decision, do it as fast as possible. Ask if they have an appeals process and how it works. Confirm where supporting documents should be sent and do so using certified mail or keep your fax confirmation.