Recently the FHA modified its guidelines to lenders for borrowers struggling to recover in federally declared disaster zones such as the large areas affected by Hurricane Sandy.
There are two very important aspects of this policy modification that borrowers should know–before, during, and after natural disaster.
According to FHA Mortgagee Letter 2013-11, “FHA is expanding forbearance relief for affected borrowers. Under this policy:
- Borrowers may suspend up to 12 months’ worth of mortgage payments while they repair their homes; and
- After the forbearance period, borrowers may be eligible for an FHA streamlined loan modification to avoid large lump sum payments.
Up to 285,922 borrowers in the Sandy-affected areas who were eligible for forbearance relief as of February 28, 2013, may be eligible for an FHA streamlined modification.”
The Streamlined loan modification is a very important part of the disaster relief effort for borrowers that can have positive effects long after the storm damage has been repaired.
The Mortgagee Letter adds, “This new loss mitigation option aligns with Fannie Mae and Freddie Mac (the Enterprises) to provide borrowers coming out of forbearance a streamlined loan modification that will not require a financial assessment. FHA recognizes that borrowers who were current at the time of the disaster should be provided an expedient means of transitioning out of forbearance into a permanent mortgage solution.”
For more information on any aspect of these changes, contact the FHA at 1-800 CALL FHA or speak to your loan officer.
Do you have questions about FHA loans or FHA refinance loans? Ask us in the comments section.