In light of the potential for future national disasters such as Hurricane Dorian and all the damage that they can cause, the Consumer Financial Protection Bureau (CFPB) has provided advice on measures to take to secure your financial situation. In recent years we have seen catastrophic damage caused by hurricanes, tornadoes, flooding and landslides, which can be extremely costly and stressful. Of course, as with any natural disaster, your most urgent needs should be addressed first and foremost. However, after that, there should be great consideration given to the financial obligations that you may incur. Further, the CFPB provided some warnings related to scams that unfortunately tend to pop up at times of disaster. This blog post, similar to a post we have written previously, will provide an overview of some of the ways to ensure that your financial situation stays intact following a natural disaster.
Once you begin to think about your financial obligations, particularly if you have had damage to your home or any other property following a natural disaster, the CFPB has provided five steps you can take to keep your financial obligations in check:
- Contact your insurance company. If you have had damage to any of your property and you have insurance coverage, then reaching out to your insurance company or broker is crucial to start the claims process. Unfortunately, many of those affected by flooding from natural disasters do not have flood insurance. It is necessary to obtain a copy of your policy to review what types of coverage you have or request a copy of your policy from your insurance company. Further, take plenty of pictures and/or video of all the damaged property in order to preserve the damage at the outset.
- Register for assistance. You can always register for assistance with the Federal Emergency Management Agency (FEMA) or online with the Disaster Assistance Improvement Program (DAIP).
- Contact your mortgage servicer. Many people may not know who their mortgage servicer is. If you do not, you can always contact the Mortgage Electronic Registration System (MERS) to find out the company that services your mortgage. Once you contact your mortgage lender and explain your situation, it will not completely eliminate your responsibility to pay the mortgage; however, your lender may be able to provide forbearance or an extension in which to make those payments.
- Contact your credit card companies and other lenders. The key to this step is contacting those companies before your next payments are due to explain why your income has been interrupted and that you may not be able to pay your loans and/or credit cards on time.
- Contact your utility companies. If you are unable to remain living in your home, ask your utility companies to suspend services for the time being. Keep in mind that if you are planning to move back into your home at some point, you may want to keep air flowing in order to prevent mildew and mold from growing or spreading.
CFPB also has provided good information on scams to be aware of. To avoid being a victim of a scam following a natural disaster, it is imperative to ask questions to make sure that the goods or services offered are legitimate.
Five things that should cause alarm:
- People who want you to pay upfront fees for any type of services, including obtaining loans.
- Contractors selling repairs door to door. Again, when a contractor asks to receive upfront payments or offers huge discounts, that should be a red flag. My practice is always to contact the Better Business Bureau to find out if the contractor is legitimate.
- Any person posing as a government employee, insurance adjuster, law enforcement official or a bank employee. Even if those people are in uniforms and have badges, never give out any of your personal information until you confirm whether that person is legitimate. For instance, government employees will never ask for payment or financial information from you.
- Be cautious of fake charities, particularly any that ask for donations over the phone. If you want to contribute following a natural disaster, it is always good to do your research and/or contact your local Red Cross or United Way for the best way to contribute.
- Be wary of any “limited time offers.” If someone is trying to pressure you to make a decision quickly or to sign anything without having time to read over it thoroughly, it should raise a red flag. Contact an attorney to help you review any type of documents or contracts. Many cities provide free legal services during times such as these. You can reach out to your local bar association to find out if these types of services are available in your area.
Further, following past natural disasters such as hurricanes, several mortgage backers have offered forbearance to borrowers in the affected areas. In recent years, Freddie Mac, Fannie Mae and the Federal Housing Administration have all offered forbearance for at least 90 days to borrowers in affected areas. These entities have also extended some cases for up to a year, depending on severity. That means borrowers did not have to make their monthly payments, and no penalty fees will be charged. (Note that interest still accrued during that time.) It is likely other mortgage providers have done the same as well. I would suggest that anyone affected by a natural disaster reach out to their provider to find out if a forbearance is being offered and how to take advantage of it. Be sure to contact your specific servicer to ensure you follow the proper protocol to obtain a forbearance.
The Federal Emergency Management Agency’s (FEMA) website, www.Ready.gov, provides helpful tips and checklists to prepare for an emergency. It also provides links to several other helpful websites.
Finally, the CFPB has provided a checklist that you can review in order to make sure that your financial records are secure. Here is the link to that checklist. You can also contact the CFPB directly by calling (855) 411-2372.