After a disaster, help is available so your mortgage doesn't add to your woes

Thanks to post-disaster programs, financial aid is available to help borrowers cope with tornadoes, hurricanes, earthquakes, floods or almost any other major disaster. It's affordable and doable to stay in a home -- without the overwhelming threat of foreclosure and loss.

Because disasters come with financial consequences as well as human costs, mortgage lenders, insurance companies, the Federal Emergency Management agency (FEMA) and the secondary marketing giants, Freddie Mac and Fannie Mae recognize they have to play a part in disaster recovery.

Each of these agencies have established different levels of aid and procedures to help victims get back on their feet.

For a homeowner, the relief can come in the form of mortgage payment assistance.

The available help comes in three major categories -- insurer-provided, government-provided and lender-provided. Borrowers should look at each as a line of defense, turning first to their insurance company and then FEMA for assistance. If neither can help or if they have special needs, consumers should look to either the mortgage lenders they originally dealt with or the current servicers to whom they send their payments.

How will each respond?
Generally, insurers will cover the cost of replacing homes for borrowers who want to rebuild. The money can come from a homeowners policy, flood insurance, specialized coverage for events such as hurricanes or a combination of all of them.

People who don't own their homes completely will generally see their checks made out to both them and their mortgage companies. The lender holds the money in escrow and pays it out as the repair work takes place or after it's completed.

Emergency help during rebuilding
In the meantime, the borrower usually receives some kind of living assistance from the insurance company for a rental apartment or other temporary housing. As long as that's the case and the customer still has a source of income, the old mortgage typically remains in force and monthly payments will still be required.

Not everyone can make those payments, of course, because their employers might be wiped out, too. Some people don't have insurance to cover alternative living arrangements, either. For these consumers, FEMA offers several types of help. Its disaster helpline can be reached toll-free at (800) 525-0321.

"The interest of the programs is to make sure people have safe housing," says Karen Marsh, an emergency management specialist with FEMA's human services division. "There are various forms of assistance."

The government will reimburse homeowners for hotel costs should they be prevented from returning home, for example, or cover an apartment rental temporarily. FEMA can provide up to $25,000 for housing and other disaster-related needs.

Homeowners who don't have any income and are in so much trouble their banks have sent written notices of foreclosure may even have their mortgage obligations covered, courtesy of Uncle Sam.

"We would pay the full payment that is causing them to go into foreclosure -- whatever is necessary so that they would be out of the foreclosure proceedings," Marsh says. "It is an integral part of the housing program."

When necessary, negotiate with lender
Borrowers can try to keep things from going that far by negotiating with their lenders, especially when the same disaster affects everyone.

Remedies can range from a two- or three-month complete payment suspension to a temporary lowering of the amount due. In the latter case, the difference usually will be tacked on to future bills a hundred or two hundred dollars at a time.

While experts realize none of these measures can wipe away the pain of living in a tent city for weeks on end or watching the roof blow away shingle by shingle, they say the efforts can make recovery a little easier.