Hurricane Katrina has now landed and devastated a vast area along the Gulf coast. For those directly impacted by the storm the effect is immense and life-changing.

Hurricane Floyd 1999

There is nothing to make such events welcome, but at least most mortgage lenders are willing to help victims when Mother Nature runs amok.

Natural disasters strike with terrible regularity, and the damage can be overwhelming. Hurricanes are known for high winds and massive amounts of rain. But the greatest danger is the "storm surge," an astonishing wall of ocean water generated by a hurricane's wind and pressure. Moving at great speed and weighing billions of tons, such waves can quickly reshape coastal areas by creating new channels, eroding beaches, and destroying man-made structures.

Over the years -- and through innumerable disasters -- lenders have a evolved a series of protocols to help borrowers when such emergencies arise. In general terms, homeowners are likely to find that most lenders (but not all) are willing to make one or more accommodations when disaster strikes.

The catch is that lender leniency is not automatic and should never be assumed. Some lenders allow no relief, but more commonly lenders offer forbearance on a case-by-case basis -- which means it's the owner's job to contact the lender, explain what happened, and show actual damages. Photos, insurance claims, police reports, news clips, and other documents can all help.

What can a lender do for you when disaster strikes? Several loan modifications may be plausible.

• Not report late payments to credit bureaus.

• Forgive late fees.

• Allow payment extensions.

• Allow a missed payment -- by adding a payment to the end of the loan term.

• Delay foreclosure actions.

For the most part, if you're in a disaster zone lenders are likely to be sympathetic and helpful. After all, it's your home but it's the lender's security -- so the quicker you re-build the less risk there is of default. For details, be certain to contact your lender as soon as possible.

Published: August 30, 2005

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