August 28, 2017
On Friday, August 26, 2017, the White House announced federal aid for Texas to help affected counties in the state recover from Hurricane Harvey. According to Whitehouse.gov, the President “declared that a major disaster exists in the State of Texas and ordered Federal aid to supplement State and local recovery efforts in the areas affected by Hurricane Harvey beginning on August 23, 2017, and continuing.”
A complete list of affected counties named as federal disaster areas is not available at the time of this writing, and conditions may be such that more counties are listed in the coming days or weeks.
But for all affected areas, the FHA and HUD have disaster relief measures that can help home owners trying to recover from the effects of the hurricane including high winds, heavy rainfall, and flooding.
FHA 203(h) rehab loans, intended to repair property damaged in federally declared disaster areas, are available with no down payment required. FHA 203(h) loans can be used in conjunction with FHA 203(k) rehab loans (which do not require being located in a federal disaster area) but in such cases the LTV and any required down payment of the 203(k) would be used for the 203(h) mortgage.
The differences between the 203(h) and 203(k) loans is, as suggested above, where the property is located. FHA 203(h) loans have the following requirement, as listed in HUD 4000.1:
“The previous residence (owned or rented) must have been located in a PDMDA and destroyed or damaged to such an extent that reconstruction or replacement is necessary. A list of the specified affected counties and cities and corresponding disaster declarations are provided by the Federal Emergency Management Agency (FEMA).”
There is other disaster relief available to borrowers in the affected areas, including loan forbearance, an FHA-requested foreclosure moratorium for FHA loans, and home loans for the purchase of new property (as opposed to rehab loans to fix the existing home).
Borrowers should not assume loan payments are no longer due-even if the home has been completely destroyed or rendered uninhabitable.
It is crucial to contact your lender as soon as possible to make arrangements on your home loan, discuss insurance issues, etc. Borrowers may also wish to contact FEMA to see what assistance may be available from that federal agency.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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