MANATEE — Floridians with Fannie Mae and Freddie Mac-backed mortgages may qualify for a temporary reprieve on their mortgages if they have Chinese drywall.
The mortgage finance companies announced Thursday that qualifying borrowers who have corrosive Chinese drywall will get a grace period of up to six months on their home loan payments.
The company’s decision comes two months after Sens. George LeMieux and Bill Nelson sent letters to Fannie Mae and Freddie Mac urging the mortgage finance companies to grant six-month loan forbearances for homeowners impacted by problem drywall.
“It’s taken a long time for help to come,” Nelson said in an e-mail. “But (Thursday) brought some welcome news for folks who are out there really struggling.”
Sarasota-Bradenton-Venice had the 34th highest rate of foreclosure activity last month out of 203 metropolitan areas studied by RealtyTrac. According to the research firm, one in every 252 homes in Sarasota-Bradenton-Venice received some type of foreclosure filing in May.
Fannie Mae’s policy titled “Unusual Hardships” will take effect in mid-July. Fannie Mae servicers will require documentation to evaluate each borrower’s home on a case-by-case basis. A property inspection also will be required to confirm the problem drywall exists.
Janis Smith, spokeswoman for Fannie Mae, said the reprieve is not for those who have already received repairs or need to get repairs due to problem drywall. The program is for those whose mortgage loans would be at risk of default by having to make repairs and find alternative living arrangements.
“This is a hardship provision for people who are not able to maintain their homes or payments on their homes and provide for repairs and, if necessary, alternative living arrangements,” Smith said.
“The issue potentially affects thousands of homeowners in a number of states,” said Terry Edwards, executive vice president of Fannie Mae, in a news release. “We want to support those who are responsibly trying to honor their mortgage obligation in good faith while correcting the problem and protecting the health and safety of their families.”
A Sarasota-based construction consultant, however, says the six-month postponement is little financial relief for homeowners.
“We’re talking about a tremendous financial hardship,” said Michael Foreman, of Foreman and Associates Inc.
Foreman said the average cost for demolition, abatement, treatment and build back of a 2,000 square-foot home with drywall is $70,000.
“I understand the concept and process that it gives them a little breathing room,” Foreman said. “But the breathing room is a false sense of security. They’re still going to owe those mortgage payments, they’re just going to be added to the back end of the loan.”
For more information on qualifying for the reprieve, visit www.efanniemae.com.
