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FHA expands foreclosure relief for disaster victims

Posted by urbanequity on March 2, 2018

The Federal Housing Administration (FHA) announced expanded mortgage relief to FHA-insured homeowners who live or work in areas impacted by Hurricanes Harvey, Irma and Maria as well as California wildfires and subsequent flooding and mudslides.

FHA is instructing mortgage servicers to offer additional options to eligible Florida disaster victims, as well as those in Texas, Louisiana, Georgia, South Carolina, California, Puerto Rico and the U.S. Virgin Islands.

FHA is introducing a new “Disaster Standalone Partial Claim” option to help struggling borrowers resume their pre-disaster mortgage payments without payment shock. It covers up to 12 months of missed mortgage payments via an interest-free second loan on the mortgage, payable only when the borrower sells the home or refinances their mortgage.

In addition, the new option requires no trial period or balloon payment, and it allows borrowers to keep their existing low-interest rate and loan term, as well as their existing monthly mortgage payment.

The expanded loss mitigation also streamlines income documentation and other requirements to expedite relief to homeowners struggling to pay their mortgage while recovering from last year’s disasters.

“It’s clear that FHA homeowners in these areas need more help to get back on their feet as they recover from these storms,” says HUD Secretary Ben Carson. “Today, we offer immediate relief to these borrowers which will allow them to resume their mortgage payments without crippling payment shock and fees while protecting our insurance fund in the process.”

FHA’s new partial claim option is available to certain borrowers who live and work in Presidentially Declared Major Disaster Areas and who became delinquent on their mortgage payments because of last year’s disasters, and whose initial mortgage forbearance periods are ending. Other requirements include:

Borrowers were current on their mortgage payments at the date of the disaster
Borrower’s income is equal to or more than their pre-disaster income
Property is owner-occupied
If a disaster-impacted borrower does not meet the eligibility requirements of this partial claim option, they might still be eligible for a loan modification under the FHA-HAMP option.

© 2018 Florida Realtors®

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