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» direct assistance. Borrowers can confirm if their loans are owned by Freddie Mac by visiting FreddieMac.com/corporate. The U.S. Treasury released special instructions for servicers administering the federal government's Making Home Affordable program in areas affected by Hurricane Sandy. "To help families in the Northeast recover from the devastation caused by Hurricane Sandy, we are directing servicers to make special efforts to ensure that homeowners eligible for assistance through Making Home Affordable have the extra flexibility and relief they need," said Tim Massad, assistant secretary for financial stability at Treasury. In areas directly impacted by Hurricane Sandy, servicers must offer at least three months forbearance to any homeowners eligible for the government program if they request forbearance. If a homeowner receives help through Making Home Affordable or is in the process of applying for assistance and misses one or more payments, servicers are directed not to "take any action that would adversely affect eligibility for the program unless there is contact with the homeowner." Local media report people who've lost their homes are scrambling to find available rental housing. With a shortage of suitable shelter in the nation's most densely populated region, it's not surprising to see reports of house hunters moving in to buy up damaged homes that can pass muster as temporary rental units. Real estate agents say Sandy has delayed home sales all along the Eastern seaboard. Closings are taking longer to complete not only because of the expected storm-triggered interruptions, such as power outages at area brokerages and transit system closures, but the New York Times reports lenders are also contributing to the sales lag because they are requiring a second property inspection to ascertain if any damage has been done postSandy. Times reporter Lisa Prevos says lenders are taking extra care in FEMA-declared disaster areas, and making the same stipulation a condition for sales even outside designated disaster zones. Real estate technology provider a la mode, inc., says in the aftermath of Sandy, orders for disaster inspection reports from lenders increased more than 200 times the normal level. "Our focus right now is to make sure lenders are able to immediately move forward on closings for unaffected properties," said Jennifer Miller, president of a la mode's mortgage solutions division. a la mode developed what it calls a "triage tool"—a customized inspection report designed to give lenders a quick assessment of collateral property. John Farley, president of a la mode's appraisal division, says delivery times for a full-fledged, traditional appraisal "will stretch to several weeks or months" because appraisers serving the area are working under highly abnormal conditions when dealing with a disaster such as Sandy. Fitch Ratings says if Hurricane Sandy has any impact on the performance of residential mortgage-backed securities (RMBS), it will probably be one that is short-term. According to the ratings agency, a "modest and temporary increase in mortgage delinquency could occur" after assessing the potential impact of the storm that has devastated areas in the Mid-Atlantic and along the Northeast Coast. While the damage from Sandy "will likely prove to be significantly less than that caused by Katrina," Fitch drew a comparison between the two to predict the potential outcome of Sandy on RMBS. As its benchmark, Fitch relied on early estimates of damage from Sandy, which could reach $20 billion for insured losses and up to $50 billion for economic damage; for Katrina, the losses were about $100 billion. After Katrina, the percentage of mortgage delinquencies nearly tripled, rising from VISIT US ONLINE @ DSNEWS.COM "Given early assessments of Hurricane Sandy's devastating impact, we are preparing steps that will authorize automatic and immediate action by the nation's mortgage servicers to help more borrowers." —Tracy Mooney, Freddie Mac's SVP of single-family servicing and REO, on November 9, 2012 17 percent to 45 percent, but within a year, delinquencies quickly subsided to 25 percent, about 1.4 times higher than the level seen prior to Katrina. Should the areas affected by Sandy also see the delinquency level become 1.4 times higher, the overall impact on RMBS pools would be modest since New York, New Jersey, and Pennsylvania account for about 12 percent of all outstanding RMBS mortgage loans, Fitch explained. Fitch also said it believes servicers are better able to handle short-term hardships now than they were in 2005 when Katrina struck. As a result, the agency believes long-term payment problems stemming from a short-term disruption are less likely with Sandy than with Katrina. 17

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