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If you’re affected by a hurricane, wildfire, flood or another natural disaster, what does it mean for your mortgage? Here are frequently asked questions and answers.
What should I do first?
When a disaster strikes your home, it can be completely upending. Still, there are practical matters you’ll need to address.
Once you’re in a position to do so, start by contacting the following entities:
- The Federal Emergency Management Agency: You can register with FEMA online, in person at a disaster recovery center or by calling 800-621-3362.
- Your homeowners insurance company: Contact your provider as soon as it’s safe for you to do so. Many insurance companies provide a 24-hour claims line. Have your policy number on hand and be prepared to provide details about the disaster.
- Your flood or earthquake insurance company: Contact any additional insurance coverage providers, if this applies to your situation.
- Your mortgage servicer: That's the company that you send your monthly payments to. Your servicer might not be your original mortgage lender. Check your monthly mortgage statement. Alternatively, try the MERS Servicer Identification System website or call MERS toll-free at (888) 679-6377.
🤓 Nerdy Tip
If an earthquake damages your home and you have earthquake coverage, keep track of any damage caused by aftershocks. You may be able to include this in your claim if the aftershock damage occurs within 72 hours of the original incident. I can't pay my mortgage. What are my options?
If the disaster makes it impossible to make your monthly house payments, ask your servicer for mortgage forbearance. A forbearance agreement allows you to make partial payments or stop making payments for an agreed-upon time. Generally, a forbearance lasts up to six months and can be extended up to another six months. Interest still accrues during the time you aren't making full monthly payments.
Check your forbearance agreement to make sure you’re complying with the terms to avoid jeopardizing your credit score. Also verify whether the lender charges late fees.
You’ll need to catch up on your missed payments after the forbearance period is over. That might involve paying extra every month for a few years, modifying the loan or reaching some other negotiated agreement.
To talk with a Department of Housing and Urban Development-approved housing counselor before agreeing to forbearance, call 800-569-4287.
» MORE: Learn about forbearance options from Fannie Mae and Freddie Mac
What aid is available?
There are various agencies that provide disaster aid.
Small Business Administration
Direct federal aid consists mostly of loans from the Small Business Administration (SBA). As odd as that may seem, the SBA is in charge of delivering disaster-related loans to individuals and families.
The SBA extends loans at favorable interest rates to replace or repair primary residences. You can borrow up to $500,000 to cover renovation or construction costs. Whether you're a renter or a homeowner, the SBA will lend you up to $100,000 to replace personal property such as clothing, furniture, appliances and vehicles.
FEMA
FEMA offers assistance to fill gaps between insurance payouts and SBA loans through its Individuals and Households Program. As of writing, the maximum assistance is $43,600 per household (for disasters occurring on or after Oct. 1, 2024). This limit is typically adjusted annually for inflation.
Assistance can be used for expenses such as:
- Basic home repairs that aren’t covered by insurance
- Temporary housing
- Disaster-caused medical and child care
- Essential items like food, water and baby formula
Federal Housing Administration
The Federal Housing Administration has a program that's designed to help disaster survivors rebuild or buy replacement homes. Under the Section 203(h) program, the FHA insures mortgages for people whose homes were destroyed or damaged in disasters. Borrowers don't have to make a down payment.
My house was destroyed. Should I keep paying the mortgage?
Unfortunately, even if your house is destroyed due to a disaster, you’re still required to maintain your mortgage payments.
So keep paying the home loan — if you can afford to or at least as best as you can — until you've talked with your servicer and have reached a settlement with the insurance company.
Did you know...
If you apply for a disaster loan from the SBA, it runs a credit check before inspecting your property. So preserve your credit score by making every effort to pay your bills on time. What if I stop mortgage payments without telling my servicer?
If you stop making payments without permission from your mortgage servicer, you could be charged late fees and your credit score could fall.
As the homeowner, you should call your lender, answer phone calls and keep opening your mail in the disaster's aftermath.
Talk with your mortgage servicer before you miss a payment. The servicer might offer forbearance.
What if I can't contact my mortgage servicer?
Whether your loan is guaranteed by Fannie Mae or Freddie Mac, insured by the FHA or guaranteed by the Department of Veterans Affairs, the servicer is expected to contact you.
In response to hurricanes, for example, Freddie Mac allowed servicers to "verbally grant" 90-day forbearances, and Fannie Mae let servicers grant 90-day forbearances, even if they couldn't contact the impacted homeowner immediately.
Even so, you should try to be proactive by calling the servicer and answering the mortgage company's calls.
What if I'm in foreclosure when a disaster hits my home?
Mortgage servicers receive foreclosure guidance from federal agencies, and the recommendations vary depending on the disaster.
The house I was buying was destroyed or damaged. What happens now?
If a disaster happens between a home appraisal and closing, "the lender is expected to take prudent and reasonable actions to determine whether the condition of the property may have materially changed” since the effective date of the appraisal report, according to Fannie Mae's guide to lenders.
If the damage is relatively minor and covered by insurance, the seller can file a claim and start repairs so the closing can proceed. But if the damage is uninsured, or if it's major, then the house must be fully repaired before the mortgage can go through.
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