Cuomo Urges Greater Flexibility on Payment Plans for Sandy Victims

Unless the GSEs change their ""restrictive guidelines,"" Superstorm Sandy victims could face a hefty balloon payment or a spike in their monthly mortgage payments, according to a release from Governor Andrew M. Cuomo of New York.

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Cuomo announced the ""New York State Department of Financial Services"":http://www.dfs.ny.gov (DFS) sent letters to the GSEs and their regulator to request changes to their guidelines on payment options.

To help borrowers impacted by Sandy, the GSEs announced extensions on forbearance plans for up to 12 months, in addition to other forms of relief such as the suspension of eviction proceedings and foreclosure sales for 90 days.

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According to Cuomo, Sandy victims who receive forbearance on their mortgage payments could face an immediate balloon payment or see a spike in their monthly mortgage payments.

""If no action is taken, these homeowners will be put at risk of falling off the foreclosure cliff. My administration is calling on Fannie Mae and Freddie Mac to take immediate steps to change these unfair guidelines so that Sandy victims can continue moving forward on the path to recovery, instead of being sent back to square one,"" Cuomo said in a release.

To address this issue, the governor's letter urged the GSEs to give further flexibility and allow servicers who service loans owned by the GSEs the ability to offer an extension of the length of the loan or the choice of a non-interest bearing payment due at the end of the loan.

Freddie Mac spokesperson Brad German explained flexibility is offered to servicers.

""Lenders are already authorized to suspend mortgage payments for up to 12 months and can individually tailor payment plans at the end of the forbearance period,"" he said. ""We expect servicers to work with the borrower and develop a plan that takes into account the borrower's circumstance and meets our guidelines.""