As deadly wildfires continue to burn through Los Angeles and the surrounding area for a second straight week, homeowners worried about the possibility of defaulting on their mortgage loans in the wake of the unprecedented disaster have been offered some time by the nation’s major lenders.
On Monday, Fannie Mae and Freddie Mac unveiled mortgage assistance and relief options for customers suffering from the historic Southern California wildfires.
Both government-backed corporations are offering 12-month forbearance plans, meaning struggling homeowners can reduce or suspend their mortgage payments for up to a year without incurring late fees, foreclosures or types of foreclosures. other legal procedures.
In cases where a homeowner has failed to contact their lender, mortgage servicers are authorized to offer a forbearance plan of up to three months if they believe the home has been affected by a disaster.
“We are committed to supporting homeowners, renters and communities in need during this challenging time,” Cyndi Danko, Fannie Mae’s senior vice president and chief lending officer, said in a statement. “If homeowners have been affected by the fires, we encourage them to call their mortgage servicer for assistance as soon as possible.”
Even after the forbearance period ends, homeowners can apply for a repayment plan, a payment deferral or a loan modification to avoid mortgage delinquency, according to the companies.
“The number one priority for those affected by the devastation of these ongoing wildfires is getting to safety,” said Mike Reynolds, Freddie Mac’s vice president of single family and chief service officer. “Freddie Mac and our partners stand ready to provide immediate help and assistance in the recovery of families and individuals.”
Mortgage delinquency can have catastrophic financial consequences, including increased late fees, a drop in the borrower’s credit score, and home foreclosure.
Homeowners are encouraged to contact their mortgage servicers, or contact Fannie Mae and Freddie Mac by phone or on their websites, to learn how to apply for assistance.
Private lenders offer relief
Some private lenders have followed in the footsteps of Fannie Mae and Freddie Mac in offering aid to those affected by the disaster unfolding on the West Coast.
Chase Home Lending, a division of JPMorgan Chase, is offering a three-month forbearance program, which can be extended in three-month increments up to 12 months. However, borrowers have an option to extend the grace period beyond the one-year limit.
Stay up-to-date with NYP’s coverage of the devastating wildfires in the LA area
Bank of America also said it has a program in place that includes mortgage forbearance options tailored to the needs of its customers.
Separately, Wells Fargo pledged $1.3 million from its foundation to support fire relief efforts, a company spokesman said Monday.
No escaping property taxes, mortgage payments
The bad news is that fire victims whose homes were severely damaged or even reduced to ashes are still waiting on mortgage payments and property taxes.
In some cases, lenders fold property taxes into borrowers’ monthly mortgage payments.
Under this arrangement, the customer pays one-twelfth of the annual property tax bill along with the mortgage payment, according to Experian.com.
This amount is deposited into an escrow account, which is then used by the lender to pay property taxes to the county on behalf of their clients by the due date.
While the value of a home can be significantly reduced, or even wiped out, depending on the extent of the damage, the land the home is built on can still be worth a lot of money, especially in high-priced areas like the Pacific Palisades. and Malibu, according to Los Angeles County Tax Assessor Jeff Prang speaking with KTLA this week.
Prang said his office will lower the assessment and property taxes, but not the land.
If the house is later rebuilt, it could potentially regain its preferred value, but this will depend on factors such as the real estate market and the quality of the repairs.
The good news is that homeowners whose properties sustained more than $10,000 in damage may qualify for tax relief if they file a disaster or disaster relief claim within 12 months of the incident through Prang’s office.
Dangerous winds threaten LA
Meanwhile, wildfires continued to rage in and around LA on Thursday, fueled by dangerous Santa Ana winds.
So far, the wildfires have killed at least 25 people, scorched more than 40,600 acres and destroyed more than 12,300 structures, including countless homes, according to Cal Fire.
The Palisades Fire, the most destructive of the blazes that ravaged the star-studded coastal community of Palisades last week, was 19% contained, while the Eaton Fire burning outside Pasadena, CA, was 45% contained.
Los Angeles County Sheriff Robert Luna has warned that the death toll could rise, given that about 30 people are still missing.
Just under 90,000 residents in the area remained under evacuation orders, half of last week’s number.
Winds of up to 65 mph in some areas threatened to spread the flames faster and carry embers miles away, potentially hampering the efforts of emergency crews to extinguish the flames.
The National Weather Service has issued a rare “Extremely Hazardous Situation” alert for parts of Los Angeles and Ventura counties until Wednesday afternoon.
However, the winds are expected to finally die down on Thursday, giving the 22,000 firefighters battling the apocalyptic inferno a welcome break.
“This is really just the last push of these winds here today,” National Weather Service meteorologist Todd Hall said. “Hopefully, if we get through today, we’ll have some better conditions for the final week, especially Friday and Saturday.”
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