WASHINGTON Jan 31 Government-backed housing giants Fannie Mae and Freddie Mac and the Federal Housing Administration on Thursday extended their disaster-relief policies to borrowers whose homes were damaged by Superstorm Sandy.
The aid applies to property owners living along the eastern United States, mainly in nine states and the District of Columbia that have been declared disaster areas by President Barack Obama.
Millions of people were left reeling in the aftermath of the super storm that made landfall in late October and resulted in flooding, wide-spread power outages and deaths.
"It's all too clear that families need more time to get back on their feet without having a foreclosure or eviction hanging over their heads," said U.S. Housing and Urban Development Secretary Shaun Donovan. "We'll do everything we can to ease the crushing burden being faced by those homeowners."
Donovan was appointed by Obama to lead rebuilding efforts in those cities and states ravaged by the historic storm. The announcement was made in conjunction with Fannie Mae and Freddie Mac's regulator, the Federal Housing Finance Agency.
For those impacted borrowers with Fannie Mae and Freddie Mac-backed loans, they will have a new 90-day extension to suspend foreclosure sales or eviction lockouts.
The government-backed mortgage lenders are also allowing servicers to offer forbearance, which lets a borrower reduce or suspend payments on a loan for a specific amount of time, or to offer loan modifications or waive late fees against borrowers with disaster-damaged homes or jobs within the impacted areas.
Fannie and Freddie, the two largest sources of housing money, were taken over by the government in September 2008 during the financial crisis.
The government-controlled companies do not directly make loans. Instead, they buy mortgages from lenders and repackage them as securities for investors.
The Federal Housing Administration, the government-mortgage insurer that mainly supports low and moderate income borrowers, will extend the moratorium for another 90 days on the initiation of foreclosures and those home seizures already in process.
Those in storm damaged areas with FHA loans will also have evictions suspended through April 30.