How to talk to your lender if you can’t pay your mortgage, car loan, or credit card due to the hurricane


Existing loans:
1. Contact the lender or loan servicer. A home mortgage may be “serviced” by the lender who made the loan or by another lender. The mortgage loan servicer is the company you send your payments to. Listings of the phone numbers of some major lenders and servicers (and also insurer phone numbers) are contained in a link from this document posted by ACORN Housing: http://www.acornhousing.org/index.php.
2. Tell the lender or loan servicer that you’ve been affected by the hurricane.
3. Ask for “forbearance.” A loan servicer can choose to defer payment and to not engage in other negative credit consequences such as late fees, collection calls, and negative reporting to a credit reporting agency. You have to ask for forbearance.
4. Ask that any fees already assessed be reversed. For example, if a credit card company has charged you late fees for payments missed due to hurricane related disruption, contact the lender, identify yourself as a person affected by the hurricane(s), and ask that fees be reversed.
5. Be sure you understand what the forbearance will include. Ask the lender or loan servicer:
• How many month’s payments will you postpone?
• Will the lender or loan servicer impose any fees for the payment deferral?
• When will the deferred payments be due?
• Will the missed payments be repaid over a long time, rather than all at once?
• Will the lender stop any negative credit reporting for the deferred payments?
6. Get all lender promises to you in writing. If your lender tells you that you can defer one or more payments without adverse consequences, be sure to get this promise in writing.
Seek legal help. Low income consumers can get free legal assistance. Look for your local legal services program in the phone directory. If you don’t qualify for a legal services program and need a lawyer, contact:
Louisiana Bar Association Legal Assistance Hotline: (800) 310-7029.
Alabama: (800) 354-6154
Louisiana: (800) 310-7029
Mississippi: (866) 255-4495
Texas: (800) 504-7030
The Louisiana Bar Association provides other useful information, including material about dealing with FEMA, at: http://www.lsba.org/home1/KatrinaVictimsflyer.pdf
7. Be cautious about any documents your existing lender or a new lender asks you to sign. Get advice about what these documents require before you decide whether to sign them.
8. Complain to the federal government. After you contact your lender, if you feel you aren’t being treated fairly, report the lender to a federal regulatory agency. You can submit a complaint though the Office of Comptroller of the Currency, Customer Assistance Group, Customer.Assistance@occ.treas.gov, or 800-613-6743. If the Comptroller doesn’t regulate your lender, they should be able to tell you who does, or to forward your complaint.
9. Let local community groups know about the lender’s conduct as well. Contact the ACORN Katrina Hotline at (866) 471-2272.
Seeking new credit:
Order your credit report and read it. You can dispute any negative information on your credit report that was caused by the disaster. Notify each credit reporting agency about all such negative items. The dispute doesn’t remove the information, but it does mark it “AU” – affected by disaster. Marking the negative information as caused by the disaster can help you try to get lenders to overlook the information when you seek new credit, which means you may qualify for a better rate.
If you are seeking new credit, tell the new lender that you have been affected by disaster. Mortgage lenders have the choice to ignore your prior home mortgage in deciding if you have too much credit, but you may have to ask for this treatment.
If your credit is temporarily worsened by the disaster, ask a new lender to use “manual underwriting” on your loan application. This is a process where the new lender looks closely at your individual circumstances.
Read everything before you sign it. If you do not understand forms offered to you, do not sign them. Beware of door to door offers that will be financed on credit.
This information is not legal advice. Consumers Union does not give legal advice. You may wish to consult a lawyer for help with your individual situation.
Prepared by:
Gail Hillebrand
Consumers Union
1535 Mission Street
San Francisco, CA 94103
415-431-6747
Dec. 6, 2005