Help for Homeowners in Federally Declared Natural Disaster Areas
This extra help is meant to be an expanded version of "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" according to HUD.gov.
Participating FHA lenders have been instructed to offer "additional options to eligible disaster victims in Texas, Louisiana, Georgia, Florida, South Carolina, California, Puerto Rico and the U.S. Virgin Islands, allowing them to remain in their homes while reducing losses that would otherwise negatively impact FHA's Mutual Mortgage Insurance Fund" according to the HUD official site.
A major part of the new measures involves something the FHA and HUD call the Disaster Standalone Partial Claim- an option "to help struggling borrowers to resume their pre-disaster mortgage payments without payment shock".
Disaster Standalone Partial Claims offers FHA borrowers relief for 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."
The partial claim option has "no trial period or balloon payment and allows borrowers to keep their existing low interest rate and loan term as well as their existing monthly mortgage payment".
Other new loss mitigation measures include streamlining of approval processes related to income documentation and other requirements.
The Partial Claim and other foreclosure avoidance measures are 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" according to the FHA official site.
What are the rules to apply for and receive this help? The following list includes, but is not limited to, the following criteria:
- Borrower must have been current on mortgage payments at the date of the disaster;
- Borrower's income is equal to or more than "pre-disaster" income;
- Property must be owner-occupied.
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