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With the occurrence of natural disasters becoming more commonplace, the need for a robust and stress-tested disaster response plan has become clear. As lenders and servicers, providing guidance to your clients offers the opportunity to show compassion as well as potentially protecting your portfolio.  Lessons learned from recent years have shown the below questions to be among the most commonly asked.

What should I do first after a disaster hit? 

    Get in touch with 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 homeowner’s insurance company, plus your flood or earthquake insurance company, if either applies to your situation.
• Your mortgage servicer. That’s the company that you send your monthly payments to; it might not be your original mortgage lender.

What happens 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.
• Talk with your mortgage servicer before you miss a payment.

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 reach out to you.
• In response to past hurricanes, Fannie Mae and Freddie Mac allowed servicers to grant 90-day forbearances, even if they were unable to contact the impacted homeowner immediately.
• Even so, you should call the servicer or answer the mortgage company’s calls.

The house I was buying was destroyed or damaged. What happens now?

Contact your mortgage lender. If a disaster happens between 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,” as stated in section B2-3-05 of the FNMA Selling Guide.

If you are concerned that your Disaster Response plan or practices aren’t what they should be, let us put your mind at ease. Contact resources@mqmrnews.com to discuss how MQMR and our servicing focused sister company, Subsequent QC, can help you identify your risk and recommend the appropriate controls to leave your organization better protected. Let us help you climb higher!