Three federally-sponsored agencies announced they are suspending foreclosures and evictions for 90 days on homes that have been affected by the catastrophic flooding caused by Hurricane Harvey.
Homeowners with mortgages owned or guaranteed by Fannie Mae, Freddie Mac or the Federal Housing Administration qualify for relief on properties located within a "FEMA-declared disaster area that are eligible for FEMA Individual Assistance," the federal agencies said on Tuesday.
In addition to the foreclosure and eviction moratorium, Fannie Mae said homeowners impacted by Hurricane Harvey may qualify for a forbearance, a temporary suspension or reduction of their mortgage payment for up to six months.
Freddie Mac announced it would suspend mortgage payments for up to 12 months. The agency also said it will work with servicers to ensure that no property inspection costs resulting directly from Hurricane Harvey will be passed on to the affected borrowers.
But despite relief from mortgage payments and penalty fees during the moratorium, interest on their loans would still accrue, CNBC reported.
What's more, flood insurance has sharply declined in Houston, according to The Associated Press, and some residents may not have the finances to fix up their homes and will be forced to go into debt, sell or abandon their home altogether.
With more than 400,000 U.S.-backed loans guaranteed by three federal mortgage agencies, Fannie, Freddie and the FHA may face possible losses.
Fannie Mae guarantees loans on over 36,000 homes, totaling nearly $5.1 billion in unpaid principal balance, in Harvey's initial impact area, according to Reuters. Freddie Mac's portfolio has 167,000 homes with mortgages it secured in counties affected by Harvey.
About another 200,000 Federal Housing Administration-insured homes are in the affected counties, the Department of Housing and Urban Development said.
"That number could grow if FEMA identifies additional counties in Texas and parishes in Louisiana in need of individual assistance," Freddie Mac spokeswoman Lisa Tibbits said in a statement to Reuters.