May 29, 2015
With headlines about Texas flooding, FHA borrowers there and in other areas in danger of being affected by natural disasters this spring may wonder what options are open to them in the wake of a flood, a hurricane, tornado or other weather event.
The FHA and HUD do have options for qualified borrowers affected by a natural disaster. At the FHA/HUD official site, you’ll find the following:
“Was your home or your ability to make your mortgage payments harmed by an event that the President declared a disaster? You may qualify for relief to help you keep your home. Much of the mortgage industry and The United States Department of Housing and Urban Development are committed to assisting borrowers whose lives and livelihoods are thrown into turmoil by a disaster.
If you can’t pay your mortgage because of the disaster, your lender may be able to help you. If you are at risk of losing your home because of the disaster, your lender may stop or delay initiation of foreclosure for 90 days. Lenders may also waive late fees for borrowers who may become delinquent on their loans as a result of the disaster.”
How does FHA disaster relief work? According to the page at www.FHA.gov titled, “Disaster Relief Options For FHA Homeowners”, participating FHA lenders have been instructed by the FHA to use “reasonable judgment” to determine which borrowers are affected by the disaster. “Lenders are required to reevaluate each delinquent loan until reinstatement or foreclosure and to identify the cause of default. Contact your lender to let them know about your situation. Some of the actions that your lender may take are:
–During the term of a moratorium, your loan may not be referred to foreclosure if you were affected by a disaster.
–Your lender will evaluate you for any available loss mitigation assistance to help you retain your home.
–Your lender may enter into a forbearance plan, or execute a loan modification or a partial claim, if these actions will help retain and pay for your home.
–If saving your home is not feasible, lenders have some flexibility in using the pre-foreclosure sales program or may offer to accept a deed-in-lieu of foreclosure.”
A foreclosure moratorium is available only for borrowers who were delinquent before the natural disaster. “If you are current on your loan payments, then you should continue to make them. FHA lenders will automatically stop all foreclosure actions against families with delinquent loans on homes within the boundaries of a Presidentially-declared disaster area.”
For borrowers who were current on their mortgages before the disaster hit, the FHA advises, “you should continue to make your mortgage payment whenever possible. If, however, you are unable to pay your loan as a result of the disaster, your lender may waive any late fees normally charged and let you know about other options. Also, if you foresee ongoing problems in making your mortgage payments resulting from changes in your financial status, you should contact your lender immediately”.
FHA says it is confident that a participating lender will attempt to help an affected FHA borrower, but for those who “are not satisfied after discussing possible relief actions with your lender, please call a HUD-approved counseling agency toll free at (800) 569-4287”.
Do you need answers to FHA home loan questions? Ask us in the comments section. All comments are held for review.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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