Part of the national fabric is the necessity to deal with a succession of hurricanes, floods, earthquakes, droughts, and blizzards -- natural disasters that impact states and whole regions.

It follows when such things happen that a large array of institutions and industries are prepared to assist victims. Common sense tends to reign in such instances, much to everyone's benefit.

Mortgage lenders routinely modify loan agreements in several ways when disaster strikes. In all cases, of course, impacted borrowers must work out details in writing with lenders. And the possible options, as we've reported before, include:

• Payment extensions. Don't worry if your payment is late -- and forget about late fees.

• Credit forbearance. Late payments will not be reported to credit bureaus. (If late payments are reported and you later need to apply for a loan, don't worry about it: Loan underwriters will ask for an explanation, so all you need to do is describe what happened and provide documentation such as an insurance claim, news clipping, etc. Most lenders will regard payments made late or missing because of a disaster as entirely understandable.)

• Foreclosure delays. Lenders don't want to foreclose in good times, and they surely don't want your home if it's under water or off its foundation.

• Revised payment schedules. A limited number of missed payments are permitted with the understanding that they will be made up over time.

Interestingly enough, another form of borrower relief has come to my attention, something which makes great sense.

Millions of loans are originated not only because they pass muster with investors, but also because they qualify for private mortgage insurance, or MI.

MI allows people to buy with less than 20 percent down -- instead of saving for years you buy now; in place of a huge wad of cash at closing, you get insurance and pay premiums. If the lender forecloses, the insurance company steps in to pay much or all of the lender's loss. With MI the lender has less risk and so is willing to make a loan even if you buy with less than 20 percent down.

Private mortgage insurance is widely used in real estate. In 2000, for example, 784,000 people bought with FHA financing, 186,000 got loans through the VA program, and 1,235,000 financed their homes with MI according to the Mortgage Insurance Companies of America, the MI industry's trade association.

Borrowers know that when they go to get a mortgage there are reams of paperwork to complete. What they may not know is that when they finance with MI coverage they must not only be approved by the lender, they must also be approved by the MI provider.

This makes sense. After all, an insurance company -- like a lender -- wants to limit its potential risk.

Part of the effort to limit risk means MI loans must meet the standards established by the insurer. In addition, borrowers must perform -- if they don't make payments the MI company can require the lender to foreclosure.

Liz Urquhart with United Guaranty, a major MI company, notes that mortgage insurers typically "require that foreclosure proceedings start when the sixth payment is due, or delinquency reaches 150 days."

So why bring this up? It turns out the MI firms, like virtually all lenders, will do what they can to help those impacted by the September 11th terrorist attacks.

In a letter to lenders dated September 19th, Jack Padgett, vice president for claims with United Guaranty, said that, "We encourage all servicers with United Guaranty-insured loans to be especially sensitive to the needs of these individuals as they strive to cope with the results of this disaster and to put their lives back together. In addition, we encourage sensitivity to the many homeowners who might have difficulties keeping their mortgages current due to an interruption of employment and income resulting from this disaster."

Padgett said that lenders should handle the terrorist cases in the same way that victims of natural disasters are assisted. Moreover, lenders need not hassle with paperwork to get approval for the relief they offer borrowers.

"Servicers will not need prior approval from United Guaranty on individual cases, as long as the workout terms are not extraordinary," Padgett wrote. "This letter may be accepted as approval to such action as individual servicers deem appropriate."

What actions did Padgett authorize? His list includes the following options -- but his firm is plainly open to others:

• Delay foreclosures for as long as three months.

• Capitalize loan payments for up to six payments. In other words, add missed payments to the loan amount.

• Allow impacted homeowners up to 18 months to bring mortgages current.

• Create temporary or permanent interest rate and monthly payment reductions.

• Accept changes and modifications acceptable to Fannie Mae and Freddie Mac.

The United Guarantee offer, and others like it, are enormously gracious and decent. Such efforts should be recognized because the usual standards of commercial conduct should not apply in unusual times -- and they don't.

Published: November 20, 2001

Use of this article without permission is a violation of federal copyright laws.

Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .