The lending business is full of bulletins, press releases and legislative directives, but rarely are we used to coming across ones containing obvious efforts to aid some of America’s neediest people: the victims of natural disaster. Freddie Mac has issued one such bulletin this month “to enable servicers to more quickly release insurance proceeds to borrowers impacted by Hurricane Sandy.”
Freddie Mac had amended disbursement requirements in 2012 to aid victims because “impacted borrowers needed up front insurance proceeds in order to engage contractors to repair or rebuild their homes.”
Four months after Sandy tore apart homes, businesses and lives along the eastern seaboard, Freddie Mac is further easing temporary insurance disbursement requirements for mortgages that were 30 or fewer days delinquent at the time of the hurricane. There are no limitations on the amount of funds that the servicer can disburse when the property has suffered less than a total or near total loss. The servicers may also choose to disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments as work is completed. If the home has suffered a total loss, servicers can release up to $40,000 with some proceeds made payable to both borrower and contractor.
While reading about financial disbursement amounts doesn’t quite tug on the heart strings like photos of ruined houses that received a mere pittance from their homeowners insurance policies, the bulletin released by the GSE ends on a high note. It included a reminder to servicers about the extension of the foreclosure sale moratorium applying to borrowers whose homes or jobs are located within the FEMA-declared disaster area. It’s easy to see GSEs like Fannie and Freddie as massive institutions without faces or personalities, but every now and then the humanity of those making policy decisions shines through and reminds us that the government and its holding are usually desirous of aiding our fellow citizens in their time of need.