Forbearance Key to Katrina Relief.(Federal Home Loan Mortgage Corp.)(Federal National Mortgage Association)

Washington -- Fannie Mae and Freddie Mac, along with mortgage insurers and servicers, are providing mortgage relief for borrowers facing hardships related to the massive and widespread damage caused by Hurricane Katrina.

"What matters most to the hurricane victims in those first few days after a storm hits is basic safety and survival, not concerns about making their next mortgage payment," said Pam Johnson, senior vice president and single-family credit officer at Fannie Mae.

Fannie Mae mortgage lenders are authorized to suspend mortgage payments for up to three months, reduce payments for up to 18 months and, in more severe cases, create longer loan payback plans. Lenders will determine appropriate relief steps by considering any uninsured losses, extended unemployment and extraordinary expenses related to Katrina that affect mortgage payments.

The Fannie Mae Foundation will donate $1 million through a $500,000 contribution to the American Red Cross and an additional $500,000 for medium- and long-term efforts supported by the housing industry to help the communities recover and rebuild. The foundation will also match funds for donations made by Fannie Mae and foundation employees to hurricane relief efforts.

Under Freddie Mac's policies, servicers may reduce or suspend mortgage payments for up to 12 months for borrowers in declared major disaster areas. Freddie is also encouraging servicers to expedite the release of insurance proceeds, waive the assessment of penalties or late fees, and not report forbearance or delinquencies caused by the disaster to the nation's credit bureaus. Freddie said it is donating $10 million to aid organizations including the American Red Cross and is matching Freddie Mac employee donations to relief efforts. It will double the match if donations support Habitat for Humanity's hurricane relief efforts.

"Our goal is to help families affected by Hurricane Katrina to keep their homes," said Richard Syron, Freddie Mac chairman and CEO. "We also want to ensure that families who are displaced from their homes receive the assistance they need."

Mortgage insurer Genworth Financial, Richmond, Va., will support guidelines to allow the reduction or suspension of mortgage payments for a specified time or even create a longer payment schedule.