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Natural disaster survivors are eligible for six months of mortgage relief under a bill introduced Thursday by two senators who were destroyed by wildfires and floods.
The Disaster Survivors Act Mortgage Relief Act applies to homeowners with federally supported loans in areas declared as disasters without accumulating interest or penalties over six months. Borrowers can apply for an additional six months of extension.
“At the beginning of the year, we saw families in Los Angeles being ravaged by wildfires. To date, many homeowners are still struggling to rebuild from this disaster,” said Sen. Adam Schiff, D-Calif, who sponsors the bill.
“As natural disasters become more frequent due to climate change, it is important to pave the way for homeowners’ stability in times of crisis,” he added.
Parts of Schiff’s former Congressional district in Southern California were devoured in January when the Eton Fire tore Altadena, destroying nearly 6,000 homes and killing at least 19 people.
His co-sponsor is Sen. Michael Bennet of D-Colo, whose state was destroyed by the 2021 Marshall Fire, destroying or destroying about 1,200 homes in Boulder County.
“Coloradan knows how difficult it is to pick up the piece and move forward after a devastating wildfire,” Bennett said. “When families weigh on the financial and emotional costs of recovery, they should be able to take the time to regain their lives and rebuild their homes.”
House lawmakers representing California’s Altadena, Pacific Palisade and Malibu have introduced a companion bill this year that will provide 180 days of mortgage relief without any fines or late fees. The suspension applies only to federally supported loans.
Non-federal lenders do not need to provide payment deductions to homeowners in the disaster belt. However, after Palisades and Eaton fired, more than 400 lenders agreed to a 90-day suspension without reporting that they had missed payments to the credit agency.
Eton Fire Survivor Freddie Saig said he used the program after the smoke damage prevented him from returning to Altadena’s home. He then moved the family seven times, paying for unexpected costs in thousands of dollars for food, clothing and other immediate needs.
Some of the costs were covered by insurance, but much of the money came out of his pocket while he awaited coverage.
He was soaked in his savings when the 90 days were over, paying his late mortgage in one lump sum and fearing he would either receive the fee or be forced to refinance.
“In reality, I put a lot of pressure on coming up with three months at a time,” he said. “There are a lot of people who don’t have three months of savings.”
In Texas, where the cataclysmic floods that began July 2 caused an estimated $240 million damage, authorities have announced a 90-day foreclosure moratorium banning the launch or completion of mortgage businesses in Kerr County, the area that has been hit hardest by the disaster.
According to the Mortgage Banks Association, late payments have almost doubled nationwide in March compared to last year’s simultaneous, up 12% to 21%.
In California, the number peaked in March in March and fell to 2,240 in June, according to data tracking company ICE Mortgage Technology.
This trend follows patterns seen after other natural disasters. This pattern has skyrocketed overdue in the months immediately following the catastrophe and is gradually leveling over the next 18-24 months, said Andy Walden, head of mortgage and housing market research at Intercontinental Exchange, parent company of ICE mortgage technology.
“It takes time for many homeowners to unravel finances while dealing with the emotional, logistical aftermath of losing their home,” he said. “From navigating insurance claims to working with FEMA, borrowers often need time to stabilize. Foreclosure suspensions introduced after major disasters often give families room for breathing that they need to recover.”
Former Altadena resident Kenni “Art” Davis stared at a 10-year mortgage when his nearly 40-year home was destroyed. He has been moving six times since then and finally landed near a neighbourhood he loved so much.
Much of his recovery journey was to pay off his mortgage, rather than borrowing or seeking extensions, his negotiating with his insurance company.
“It could have meant financial ruin,” he said.
He intends to rebuild by bringing together money through just $500 in savings and microloans. He said that mortgage relief bills sound good on paper, but their timing leaves something that is what they want.
“My grandmother would have said it was a day late and the dollar was short,” he said. “We all rely on helping to make it one day and the next.”
Drone footage from San Angelo police shows rescuers saving residents during Texas flooding.
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