The damage caused by the June 2013 Colorado wildfires was abhorrent. Officials report this fire to be the most destructive in the state’s history — 14,000 acres burned, almost 500 homes destroyed and two people died from the fires. Many families were dislocated and were uncertain of their homes’ state.
Disasters raise questions about the future of a homeowner’s property: What if my home was damaged? How am I supposed to pay my monthly mortgage? What if I require special assistance? What happens to my credit? Disasters can lead to troubling times, but there are steps veterans can take to resolve an ugly situation.
Contact FEMA (Federal Emergency Management Agency)
You’ll begin by applying for a disaster application online at www.DisasterAssistance.gov or by calling 800‐621‐3362. The VA recommends not paying your loan in full before checking with the SBA for assistance on the uninsured portion of your loan. You’ll need to check what your homeowners insurance covers, but additional support may be provided from external agencies.
Get on the Phone
This is where having a helpful mortgage company becomes incredibly valuable. You may be required to continue your monthly payments, but forbearance (delaying a loan payment) or a loan modification might be available to veterans who’ve suffered an unforeseeable disaster.
Similarly, contacting your insurance company is crucial. File an insurance claim ASAP, but be wary of reaching a hasty settlement. Get an estimate from at least two
contractors to see if the home is salvageable.
Change Your Address
If you’re living with another family member or a friend, change your address for the time being. Notify your local post office and the VA Regional Office (http://www.benefits.va.gov/homeloans/contact_rlc_info.asp) so you’ll receive your VA benefit checks.
Check For Other Assistance Programs
The VA recommends checking the local offices at American Legion, Veterans on Foreign Wars and Disabled American Veterans for external assistance. These programs may reach out to non-members and members alike.
After disasters, the VA encourages companies that service mortgages to establish a 90-day moratorium on initiating new foreclosures and to offer services such as forbearance and loan modifications.
The 90-day grace period allows veterans a chance to continue their current mortgage plan, and forbearance delays the payments a borrower would have had to make. This support will hopefully prevent foreclosure and give borrowers the time they need to gather the necessary finances.
What Happens to My Credit After a Disaster?
The VA is sympathetic to borrowers in areas affected by natural disasters. The VA encourages credit servicers to suspend credit reporting on such veterans. You’ll want to include a 100-word written statement on your credit report explaining your situation after the disaster. Lenders tend to be more lenient towards extenuating circumstances, and this will help protect your credit even further.
Remember to review your credit score a few months after the disaster to ensure your credit score meets your expectations.
Photo courtesy of The National Guard