New Senate legislation aims to give natural disaster survivors a bit more breathing room when it comes to paying their mortgages. The Mortgage Relief for Disaster Survivors Act, introduced Thursday by Sens. Adam Schiff of California and Michael Bennet of Colorado, would allow homeowners with federally backed loans in declared disaster areas to pause mortgage payments for six months, free of interest or penalties, reports NBC News. Borrowers could request additional six-month extensions if needed.
The proposal follows a string of devastating events, including the Eaton Fire in California's Altadena, which destroyed thousands of homes and left at least 19 dead, and Colorado's Marshall Fire, which razed more than a thousand homes in Boulder County. Both senators cited the need for stability for affected families, especially with the increasing frequency of disasters linked to climate change. A similar bill in the House would grant a 180-day payment break on federal mortgages, but private lenders remain exempt from such requirements.
Some nonfederal lenders have voluntarily provided short-term relief following major fires, but these pauses often leave homeowners scrambling to pay sizable lump sums once the grace period ends. Data shows mortgage delinquencies spike after disasters, then slowly ease as homeowners work through insurance, government aid, and rebuilding.
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California has already been trying to help homeowners affected by local disasters take care of mortgage payments, and for good reason: Per a recent Harris poll conducted for the American Institute of CPAs, about a third of Americans don't have money at the ready in case of a natural disaster, even though two-thirds say such a disaster would wreak havoc on their finances, reports the MPA.
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