Tornadoes that cut swaths of destruction through the nation's heartland this year caused billions of dollars of damage, but there is some relief.
Fannie Mae relief
Homeowners whose homes were damaged or destroyed by recent storms in the Midwest, are getting some mortgage payment relief from Fannie Mae, provided their homes are located in counties declared major disaster areas, including no mortgage payments for a year.
"In the wake of these astonishing storms, Freddie Mac has authorized the nation's mortgage servicers to provide a full range of mortgage relief options to affected borrowers with mortgages owned or guaranteed by Freddie Mac," said Anthony Renzi, Executive Vice President of Single-Family Business, Operations and Technology at Freddie Mac.
"Options we have instructed our servicers to offer include granting forbearance on their mortgage payments for up to one year," Renzi said.
Freddie Mac allows servicers the discretion to reduce or suspend mortgage payments for up to 12 months, but each case must be individually assessed to determine the assistance that best fits the homeowner.
But that's not all.
For those with Freddie Mac loans, other assistance includes:
Suspending foreclosure and eviction proceedings for up to 12 months.
Waiving assessments of penalties or late fees against borrowers with disaster-damaged homes.
Not reporting forbearance or delinquencies caused by the disaster to the nation's credit bureaus.
When disaster strikes, similar mortgage payment or foreclosure relief is also often available from Fannie Mae, other federal agencies that insure mortgages and private mortgage lenders and the Internal Revenue Service (IRS).
The IRS steps in with tax relief in the form of a casualty loss deduction.
A casualty loss deduction for property damage is based on the decline in the fair market value of property due to damage or destruction by a sudden, unusual or unexpected event, including natural disasters and acts of terrorism.
If you are eligible for the deduction you are only eligible to the extent that insurance or other forms of compensation don't cover the cost of disaster damage or destruction of your property.
As is the case with deductions for mortgage insurance and property taxes, casualty loss is an itemized deduction included on Schedule A. Schedule A deductions are subtracted from your adjusted gross income, reducing your taxes by reducing your taxable income.
Individuals seeking to deduct personal property losses, can't deduct the full amount of the loss and must follow a detailed calculation involving their adjusted gross income and the major portion of the loss to determine the actual deduction.
State tax laws vary on casualty loss deductions and because casualty loss deductions often involve large sums and complex tax calculations, you should seek the help of a knowledgeable tax professional to complete any tax return -- state or federal.