Life After Sandy: Mortgage Help for Homeowners

Natural disasters can polarize the country. As residents in several states struggle to regain their lives in the aftermath of Hurricane Sandy, the superstorm that walloped the East Coast over the last weekend in October, pundits, politicians, advertisers and entertainers claimed the events of the storm for a variety of agendas. But while all of that went on, people in several states faced the loss of homes and properties. Mortgage superagencies Freddie Mac and Fannie Mae stepped in to help, with offers to suspend or reduce payments owed on mortgages for up to one year.

Freddie Mac, formally known as the Federal Home Loan Mortgage Association, is authorized by Congress to provide a secondary market for residential mortgages, working with a variety of lenders, both small and large, all over the country to provide home loans for homeownership and investments alike. Freddie Mac and its sister agency, Fannie Mae, (the Federal National Mortgage Association), which also trades in loans, together hold about half the mortgages in the United States, either directly or through secondary lenders.

As of Fall 2012, that's about 31 million loans. And along with a few other federal agencies, they backed nearly 90% of all new loans in 2012. Unless you're purchasing with cash or using funds from a private lender, the chances are good that you'll be working with one of these agencies in some way to secure a mortgage on residential property.

Because of the reach and scope of these two agencies, the decision to suspend loan payments to qualifying homeowners has immediate and far-reaching impact. What's more, Freddie Mac has also asked its mortgage services to suspend foreclosure proceedings for at least a year on affected dwellings, which must be in a f

ederally declared disaster area. Additional help includes not reporting delinquencies to credit reporting

agencies.

Fannie Mae has also taken steps to aid disaster-struck homeowners, with a plan for mortgage services to help struggling homeowners by temporarily reducing or waiving mortgage payments for an unspecified length of time, allowing them time to recover and rebuild. The actions taken by these two superagencies echo the announcements of similar help offered to New Orleans homeowners in the wake of Hurricane Katrina, a kind of assistance not available to property owners who own the dwellings free and clear.

This kind of assistance is offered to property owners regardless of their status, investor or homeowner. And along with landlord's insurance that can cover loss of income from the properties in the event of this kind of disaster, Freddie Mac's suspension of mortgage payments on eligible applications means that income property investors who own single family and multiplex homes are protected from losses on the investment while rebuilding and installing new tenants.

Home equity is vulnerable. Those who own their homes free and clear are ineligible for this kind of break and will likely lose money. But as Jason Hartman says, a fixed rate mortgage that can be refinanced is an investor's best friend, offering protection in the event of a major disaster and sparing an investor's own money for other purposes. Working with Freddie Mac and his sister Fannie Mae, as well as their secondary mortgage services, investors can ensure that their properties are viable and capable of producing a return for the life of the investment even when nature intervenes. Regardless of politics and popular culture, everyone needs a place to live.

The American Monetary Association Team

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