In the last several years, the United States has seen natural disasters occurring at an overwhelming rate and intensity. Floods, hurricanes, tornadoes and wildfires have damaged property and claimed lives from coast to coast.
Many Americans were caught completely off guard, lacking the types of flood and other insurance that may have helped them recover their losses.
For VA homeowners in particular, disasters raise tough questions about the future: 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.
1.Contact FEMA (Federal Emergency Management Agency)
You’ll begin by requesting a disaster application online at www.DisasterAssistance.gov or by calling 800‐621‐3362.
This should be one of your first steps if you’re impacted by a natural disaster. Registering with FEMA right away will give you a better shot at receiving assistance quickly.
2. Contact Your Loan Servicer and Insurance Company
This is where having a helpful mortgage company becomes incredibly valuable.
Your mortgage loan servicer is an invaluable resource when it comes to exploring repayment options. But they can only help if they know what kind of help you need.
Staying in contact is the best way to make sure you’re on track to avoid late fees or default during recovery.
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.
3. Find Short-Term Relief
From home repairs to hotel stays, disaster recovery can be a long and expensive process, and many homeowners find it difficult to continue making mortgage payments. Some may be faced with the choice between paying the mortgage and paying their homeowners insurance deductible.
The good news is that options are available.
The VA encourages mortgage servicers to offer services such as forbearance or a loan modification after a natural disaster.
For example, your mortgage company may offer short-term forbearance—essentially a plan that delays your mortgage loan payments for a set period of time.
Signing up for forbearance is usually simple. Call your mortgage servicer to learn about the options they may offer.
Veteran homeowners with non-VA loans may be able to obtain forbearance and other relief options from their mortgage servicer.
4. Make a Plan for the Long Run
Many homeowners opt to take advantage of forbearance as an immediate step after disaster strikes. Based on the scope of your disaster impact, you may be eligible to extend forbearance.
But it’s never too early to make a plan for the long term.
At some point in the future, those missed payments will come due. Coming up with a lump sum after forbearance is a huge challenge for many disaster-affected homeowners.
Fortunately, there are options available that allow those payments to be made over time.
For some, the VA disaster modification can be a good solution.
These modifications adjust your mortgage payment permanently, allowing you to repay what you missed during forbearance over time. Your mortgage company can help you find the plan that works best for you, but it’s essential to reach out before the initial forbearance period ends.
Don’t let fear of the unknown keep you from seeking help. The VA urges servicers to offer a specific type of modification that’s targeted to people recovering from a disaster.
Either way your mortgage company can help you find the plan that works best for you.
5. Check For Other Assistance Programs
The VA recommends checking the local offices at American Legion, Veterans of Foreign Wars and Disabled American Veterans for external assistance.
These programs may be available to non-members and members alike.
What Happens to My Credit After a Disaster?
The VA is sympathetic to borrowers in areas affected by natural disasters, encouraging mortgage servicers to suspend credit reporting on such veterans.
If you’ve stayed in contact with your servicer and taken advantage of the available VA mortgage relief options, it’s likely that your credit scores will not be affected.
That being said, if you reach the end of forbearance and haven’t set up a long-term relief plan, late payments will start to make a negative impact. Certain loan modification programs may also have an impact on your scores, depending on the way the modification is reported to the credit bureaus.
The good news for VA homeowners is that a VA disaster modification generally won’t lower your scores. But not all servicers will offer the VA’s recommended options. It’s crucial to stay in touch regularly with your loan servicer to be sure you’re on the right track.
It’s also a good idea to check up on your credit a few months after the disaster to ensure your scores meet your expectations.