Almost 300,000 Federal Housing Administration borrowers whose homes were damaged by superstorm Sandy can apply for loan modifications that could dramatically lower their mortgage payments, U.S. Housing and Urban Development Secretary Shaun Donovan said in a joint news conference with Sen. Charles Schumer in Manhattan Friday.
The announcement comes as an earlier mortgage moratorium implemented after the Oct. 29 storm nears an end. And, it comes with one provision: homeowners must still be in the process of actively repairing their damaged houses.
"This will give homeowners the breathing room they need," Donovan said at Schumer's Manhattan office. "Many are still struggling and it is heartbreaking to know that people who lost their homes because of a natural disaster can now lose their homes from a man-made disaster: a foreclosure."
The new measures will allow for "streamlined loan modifications" that will allow 285,922 in storm-ravaged areas of New York and New Jersey, known as the Presidentially Declared Major Disaster Areas, to "stretch out a balloon payment" -- and lower their monthly mortgage payments.
"We are asking all private banks to defer payments and put together a workout plan so that there is not a lump-sum due," Schumer said. The Democratic senator added: "It is time for the banks to step up and help homeowners who have been doing the right thing all along."
Previously, officials had instituted a mortgage moratorium that allowed homeowners whose homes had been devastated by Sandy not to pay their mortgages. That moratorium ends April 30.
Donovan, who also was joined by New York Rep. Carolyn Maloney, said the new HUD measures will not require homeowners to provide a detailed financial assessment.
"It may be impossible to do an assessment, because records may have been lost because of flooding," Donovan said.
With Maria Alvarez