Finance giants Fannie Mae and Freddie Mac have agreed to make it easier for homeowners to avoid large lump mortgage payments that accrued during grace periods after superstorm Sandy, officials said Thursday.
The agencies are allowing Sandy victims to apply for streamlined loan modifications to prevent balloon payments, lower monthly bills and avoid foreclosure.
"I applaud Fannie Mae, Freddie Mac and the Federal Housing Finance Agency for acting swiftly and unveiling this new program to protect Sandy victims from sudden mortgage payment spikes," Gov. Andrew M. Cuomo, who had asked the agencies to modify their policies, said on Thursday.
After the storm, most banks told flooded homeowners they could skip mortgage payments for up to six months without penalty. But under Fannie and Freddie's policies, those homeowners could be subject to immediate balloon mortgage payments of more than $6,000 when that grace period ends, state officials said.
The agency that regulates Fannie and Freddie -- the Federal Housing Finance Agency -- announced the streamlined modification program in March, allowing borrowers to amend loans without providing detailed documentation of their financial hardship.
The program was scheduled to begin in July for distressed borrowers nationwide. It is now available immediately for Sandy victims who signed up for forbearances and were current on payments before the storm.
State Superintendent of Financial Services Benjamin Lawsky urged Fannie and Freddie to issue clear instructions to mortgage servicers to implement the program quickly.
Spokesmen for the agencies said they were committed to giving flood victims a variety of alternatives to catch up on payments as they rebuild their homes.
"We appreciate the opportunity to work with Gov. Cuomo and Superintendent Lawsky to help ensure Hurricane Sandy victims with Freddie Mac mortgages can access all of the best options available for mortgage relief," Freddie Mac spokesman Brad German said.