No matter where you live, there's a chance that something -- whether hurricanes, tornadoes, floods or earthquakes -- will demolish your house. If the place you call home is reduced to a ruin, paying the mortgage may seem pointless until you're back on your feet. Natural disasters do not cancel your obligation to pay the bank every month, but some lenders will give you time to recover.
If you want your lender to cut you some slack, you have to make the first move. As soon as possible after your home is destroyed, call your loan servicer. Find the appropriate person to grant you some relief, explain the problem and ask what information he needs to suspend payments for a while. Take notes. When the conversation's finished, start putting together whatever paperwork or photos the servicer needs to see.
If you can prove you need help, lenders may suspend your mortgage payments while you put your life and your house back in order. If your house is in an official disaster area, the Federal Housing Administration usually imposes a 90-day moratorium on FHA-insured loans in the area. When Hurricane Sandy hit in 2012, the government corporations Freddie Mac and Fannie Mae said it was okay for lenders to postpone mortgage payments up to a year.
Even in a federally recognized disaster, Freddie and Fannie are making recommendations, not issuing mandates. If your lender decides not to give you a year's moratorium, that's legal. If you don't have an FHA 90-day guarantee, you may get a couple of months' grace period -- or you may get nothing at all. Lenders and servicers are more inclined to make the decision on a case-by-case basis so you won't find out until you hear back from the company.
Not getting mortgage relief may leave you in a tough spot. If your place of business has been destroyed, or you need money to cover the insurance deductible, making the next mortgage payment may not be practical. All you can do is ask. Based on the answer, you then figure out your next move. Observe whatever deadlines or grace period your lender grants, because you probably won't get any breaks if you miss payments after that.
A Durham, NC resident, Fraser has written about law, starting a business, balancing your budget and fighting evictions, among other legal and financial topics.