If your home is damaged or destroyed by the Los Angeles wildfires, or from any disaster for that matter, call your mortgage loan servicer.
Homeowners may be eligible for mortgage relief in the form of a monthly payment forbearance.
Note that your loan may be owned by Fannie Mae or Freddie Mac even though you make your mortgage payment to ABC mortgage company. If either government institution owns the mortgage, you have up to 12 months of payment forbearance without incurring late fees or penalties.
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Freddie Mac also covers homeowners whose places of employment have been affected, resulting in a financial hardship that prevents them from being able to make their mortgage payments.
Homeowners have several options to make up the missed payments, including additional forbearance if needed, according to a Freddie Mac statement.
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Reinstatement, a repayment plan, payment deferral and loan modification all are available for consideration from Freddie Mac.
The loan servicer can tell homeowners if either mortgage giant owns the loan, or search for “lookup tools” offered by Fannie Mae and Freddie Mac.
The U.S. Department of Housing and Urban Development (HUD) allows up to 12 months of payment forbearance on FHA mortgages for any area under a presidential disaster declaration.
Also see: Dealing with disasters at your HOA
If you have a VA mortgage, the US Department of Veterans Affairs encourages loan servicers to extend all possible forbearance to borrowers in distress, according to Susan Carter, its director of media relations. This includes forbearance requests, moratorium on foreclosure and late charge waivers.
Chase Bank offers forbearance for three months. It is then extendable in three month increments up to 12 months. Forbearance exits can vary, because they are unique to the customer’s circumstances and dependent on the loan investor/insurer.
The customer is evaluated for loss mitigation options, which could result in a deferment of missed payments, a Chase Bank declared told me.
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Bank of America has a Client Assistance Program offering forbearance and other options. BofA also offers assistance for account holders place of work was affected by the wildfires, according to spokesperson Carla Molina.
Wells Fargo Bank customers can contact the Disaster Assistance team, according to spokesperson Laurie Knight.
Do not assume you will automatically receive some type of mortgage payment forbearance. If you have an exotic mortgage or so-called non-QM loan or a private party mortgage, there may be no options for payment forbearance.
“The borrower is still responsible for making mortgage payments,” said Eric Morgenson, vice president of business development at Angel Oak Mortgage Solutions, a non-QM lender.
Full disclosure: My firm is an approved broker with Angel Oak.
Assembly Bill 238, called the Mortgage Deferment Act, was introduced Jan. 13 and listed as pending in the California legislature. If approved, it would override any lenders’ unwillingness to offer payment forbearance.
The bill allows borrowers to request an initial pause of their monthly mortgage payments for up to 360 days in order to provide financial relief to those who have lost their homes or livelihoods to wildfire.
Borrowers with mortgages on homes, condos townhouses and rental property with one to four units in Los Angeles County would be eligible for payment delays if they are experiencing financial hardship due to the effects of the wildfire (loss of home or income disruption).
The missed payments must be repaid, although it may be paid back over time.
Updated Freddie rates
The 30-year fixed rate averaged 7.04%, 11 basis points higher than last week. The 15-year fixed rate averaged 6.27%, 13 basis points higher than last week.
The Mortgage Bankers Association reported a 33.3% mortgage application increase compared to one week ago, which also includes an adjustment for the New Year’s holiday.
Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $806,500 loan, last year’s payment was $236 less than this week’s payment of $5,387.
What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 5.875%, a 15-year conventional at 5.625%, a 30-year conventional at 6.5%, a 15-year conventional high balance at 5.99% ($806,501 to $1,209,750 in LA and OC and $806,501 to $1,077,550 in San Diego), a 30-year-high balance conventional at 6.75% and a jumbo 30-year fixed at 6.75%..
Eye-catcher loan program of the week: A 30-year mortgage, with 30% down locked for the first 5 years at 6.25% with 1 point cost.
Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@mortgagegrader.com .