NEW YORK—Many homeowners trying to return to their homes following Superstorm Sandy face the burden of repair costs as well as mortgage payments.
“It is an impossible burden for so many middle class families,” Sen. Charles Schumer said from his New York City office Friday.
Schumer stood alongside HUD Secretary Shaun Donovan to announce a new extension for loan forbearance. Borrowers in FHA loans will be allowed to suspend up to 12 months worth of mortgage payments while their homes are being repaired—as long as they were current on their mortgage at the time of the storm.
“They should not face default or potentially exorbitant payments simply because they were impacted,” Donovan said. “They should not be victimized twice; first by a natural disaster and then a man-made disaster.”
Donovan said 286,000 homeowners will be eligible for the program.
Homeowners will still be responsible for payments once the grace period is over. But, to prevent massive balloon payments due all at once, borrowers will be eligible for a loan modification which includes taking advantage of the current low interest rates.
Schumer said the measure will allow homeowners breathing room as they recover, preventing foreclosure. “Imagine fixing your home and then being foreclosed,” he said.
Donovan said homeowners who obtained loans under Fannie Mae and Freddie Mac will also be eligible for the loan modification program.
Schumer expects private banks will follow suit. “The feds are blazing a path and we are asking all private banks to follow,” he said.
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