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Wednesday, October 31, 2012

Sandy and the Need for More Time, Paperwork for Mortgages

Homes on the New Jersey coast damaged by Hurricane Sandy.ReutersHomes on the New Jersey coast damaged by Hurricane Sandy.

A colleague whose home is located in an area affected by Hurricane Sandy had applied last week for a refinance of his mortgage and thought he was done signing forms. But today, his lender said that because his home was in a declared disaster area, he'd have to provide additional documents.

That might not be the easiest thing to do, since getting documents may be a challenge for those in areas without power.

A Bank of America spokesman, Kris Yamamoto, said that due to “GSE guidelines and our policy, and depending on the category of the disaster area,” there may be additional requirements to process a loan, like an inspection or certification on the property. (The term GSE refers to government-sponsored enterprises like Fannie Mae or Freddie Mac, which are major buyers of home loans.)

He also said that if the processing of a loan is delayed due to a bank site being temporarily closed  and the interest rate lock expires during that time, the customer will continue to qualify for their previous interest rate.

A Chase spokeswoman said she was looking into my inquiry. Meantime, she said, Chase is automatically giving many borrowers affected by the storm an extra seven-day extension on an interest-rate lock, if they were scheduled to close on a mortgage this week. (She said the extension applies to Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Washington, D.C.)

Wells Fargo didn't immediately respond to an e-mail request for information about how the storm i s affecting loan applications.

Do you have a home loan or refinance pending? Has the storm affected your application?