A decade ago, Hurricane Sandy ravaged the Caribbean before tearing up the Eastern Seaboard, causing destruction in 24 states. The National Hurricane Center reported that damage caused by this super storm amounted to at least $70 billion, making it the sixth costliest hurricane on record. This fall, Hurricane Fiona targeted Puerto Rico, while Ian took aim at the southeastern United States. Effects from both are still being determined, though initial damage estimates for Ian are around $63 billion and recovery efforts could be lengthy. And the hurricane season isn’t over.

Over the past ten years, there have been numerous extreme weather events in the U.S., each of which has exceeded $1 billion in damages. Collectively, these events have caused the loss of more than 5,000 lives, displaced an average of 232,000 people per year and resulted in damages of more than $800 billion.

Since Hurricane Sandy, however, Freddie Mac has adopted policies and practices to assist homeowners who have been affected by a disaster. We continue to draw on past lessons to learn how to respond swiftly and efficiently to other massive events:

1. The increasing frequency of massive weather events has allowed us to hone an effective playbook of disaster relief.
So-called “hundred-year storms” are now occurring every few years, impacting more American homeowners. However, as destructive as these events are, they also offer us valuable lessons to streamline programs and processes. When Hurricane Sandy hit, we updated policies and implemented programs like the (since retired) Disaster Relief Modification, which helped borrowers with temporary hardships quickly get back on their feet.

These programs were further refined over the years during subsequent disasters—including the trio of hurricanes in the fall of 2017—after which we introduced the Extend Modification, which benefitted borrowers by not capitalizing their missed payments. Both programs were replaced in 2021 by the Disaster Payment Deferral, which was heavily based on lessons learned from the COVID-19 pandemic and the success of the COVID-19 Payment Deferral.

By the time this season’s two big storms occurred, we had deftly adapted to providing off-the-shelf solutions. Servicers know the playbook and borrowers better understand where and how to seek assistance, allowing us to offer relevant solutions to homeowners while continuing to effectively manage risk.

2. Being proactive is crucial, but being able to react quickly is equally important.
No matter how much you try to plan, things rarely turn out exactly as expected. While hurricanes regularly occur in Florida, rarely do they originate on the west coast before moving to the central part of the state—as Ian did. Proactivity involves getting out in front of the situation to anticipate the unexpected.

The Federal Emergency Management Agency (FEMA) declares disasters at the county and local levels. However, by leveraging other data sources, tools and technology, we can pinpoint with more accuracy which properties have been impacted. In turn, we can react faster to assist those homeowners.

3. Minimizing processes and paperwork and expanding qualified disasters widen our reach.
Homeowners who have undergone a severe weather event have enough worries without being bombarded with requests for documentation to obtain temporary mortgage assistance or a permanent solution. Streamlining is crucial. Being able to approve loss mitigation solutions for impacted homeowners without required documentation is paramount and helps get our borrowers the help they need as quickly as possible. When total streamlining is not available, we encourage the use of electronic loan documents and eSign, which can prevent loss mitigation deadlines from elapsing if homeowners are struggling to receive or return physical documents.

We have also made improvements in the insurance loss settlement process. Today, the steps for initial disbursements, endorsements and contractor selection are seamless. Most borrowers receive most if not all their insurance funds up front so they can make necessary repairs sooner, removing friction in the claims process.

And, because it’s not only FEMA-declared storms, fires, earthquakes or other events that cause major property damage, we’ve expanded what constitutes an eligible disaster to include any insurable damage-related event. Whether a tree falls on a house because of sustained winds during a hurricane or because rotting roots led to structural instability, the impact to the homeowner is the same. In this way, we can provide much-needed relief to a wider swath of homeowners.

As Freddie Mac confirms options for borrowers impacted by Hurricanes Ian and Fiona, it’s crucial to ensure a mortgage is serviced in accordance with the Freddie Mac Single-Family Seller/Servicer Guide (Guide), and that homeowners receive the assistance they need.

While we aren’t yet completely in a place where making mortgage payments isn’t the first worry of disaster-affected homeowners, we’re striving towards that goal. As we continue to make effective and practical improvements to our policies and programs, we encourage you to join us on our journey to assist homeowners facing challenging disaster-related circumstances. For more information, visit the Disaster Relief section of the Client Resource Center and refer to Guide Chapter 8404: Servicing Mortgages Impacted by a Disaster.