Fannie Mae Announces Mortgage Relief for Hurricane Katrina Victims in Mississippi, Louisiana, Alabama and Florida; Lenders Now Have More Flexibility to Handle Insurance Disbursements in Wake of Disasters

WASHINGTON, DC -- Fannie Mae (FNM/NYSE) has mortgage relief provisions in place for borrowers in Mississippi, Louisiana, Alabama, Florida and other states facing hardships as a result of widespread damage caused by Hurricane Katrina.

With Fannie Mae's disaster relief provisions, lenders help borrowers in several ways, including suspending mortgage payments for up to three months, reducing the payments for up to 18 months, or in more severe cases, creating longer loan payback plans. Such assistance is provided on a case-by-case basis, and is designed to meet the individual needs of borrowers.

"What matters most to hurricane victims in those first few days after a storm hits is basic safety and survival, not concerns about making their next mortgage payment," said Pam Johnson, senior vice president and single family credit officer at Fannie Mae. "Fannie Mae has made changes to its insurance requirements that will ease the process for lenders and, more importantly, provide homeowners with much-needed relief." Johnson also said that she greatly appreciates the lenders who work with Fannie Mae and assist homeowners with payment issues in the aftermath of a disaster.

Fannie Mae's business guidelines advise lenders to counsel borrowers on all possible mortgage payment work-out options, and to inform homeowners of disaster relief available from federal agencies. Payment relief is available for single-family mortgages (including condos) serviced by Fannie Mae lenders in areas affected by the hurricane. Holders of Fannie Mae mortgage securities will be paid as usual during the relief period.

Mortgage lenders doing business with Fannie Mae will, according to Fannie Mae's guidelines, determine appropriate relief steps by considering:

• any uninsured losses;
• extended unemployment; and
• extraordinary expenses related to the storms that affect a homeowner's ability to make their mortgage payments.

Fannie Mae also recently announced that it has streamlined its procedures for handling insurance proceeds to provide lenders with more discretion in disbursing insurance proceeds. These improved procedures are based primarily upon the status of the mortgage at the time of the disaster and the extent of the damage. The new procedures are applicable for any federal or state declared natural disaster and will enable lenders to work more effectively and efficiently to address the needs of those borrowers who may require assistance.

In addition, lenders are now required to temporarily discontinue reporting delinquencies to credit bureaus if they are aware that the borrower's delinquency is attributed to hardships as a result of a natural disaster.

For information on mortgage relief, homeowners who have experienced hardships should contact the lender to whom they send their monthly mortgage payment.

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Fannie Mae Announces Mortgage Relief for Hurricane Katrina Victims