August 26, 2020
At the time of this writing, multiple natural disasters are affecting homeowners from California to the Gulf Coast. This, in addition to COVID-19 concerns makes for a lot of hardship for those who have had to evacuate, and for those who have experienced damaged homes and lost property.
The FHA and HUD have specific disaster-relief policies on the books that are intended to help those affected by natural disasters recover from them.
FHA loan rules include limited foreclosure moratorium procedures for borrowers, and there is help in the form of FHA rehabilitation loans specifically for disaster victims.
However, this relief is provided to those who reside in areas that have been declared as federal disaster areas. The President must make such a declaration (such as the one made in California for wildfire issues there) before FHA disaster relief applies.
And the relief is not automatic–you, the borrower, are required to reach out to your lender as soon as possible after a storm or other disaster that has affected your home.
You will need to make payment arrangements with the lender and investigate your options for an FHA rehabilitation loan where appropriate to address the damage to your property.
Insurance is also a concern; it is crucial not to be rushed into a settlement by your insurance company–take your time, work with your lender, and make the most informed decisions you can about settlements and related issues.
What FHA resources can you use to get started with home loan relief after a natural disaster? Here is some good advice:
- Contact your lender IMMEDIATELY after a disaster to make payment arrangements and seek relief–the longer you dealy, the fewer your options are;
- Go to the FEMA official site to see if your area has been declared a federal disaster area–as soon as it has, contact your lender about FHA mortgage relief if you don’t already have arrangements made or if you want to alter your arrangements based on newly-available FHA foreclosure relief measures;
- FEMA and the Small Business Administration can help home owners in natural disasters. SBA help may be available even if you are not a small business owner depending on the circumstances and the nature of the disaster;
- Try to avoid missing payments if you can–but if you cannot, ask your lender about foreclosure avoidance steps;
- Some mortgage relief is available to borrowers who have never missed a payment or haven’t missed a payment within a certain time frame. Other types of relief are only offered to those who are delinquent. The earlier you act, the more flexible your foreclosure avoidance options are.
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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