Housing Aid For Disasters - Part 2
Adding disaster recovery costs to an existing mortgage can put a homeowner in an impossible situation. In extreme cases, a homeowner can face paying a full mortgage on a property that has been destroyed. In a declared disaster some relief is available: The U.S. Department of Housing (HUD) and the mortgage industry are committed to helping people whose lives have been negatively impacted by a catastrophe. The same goes for your lender, who may stop (or at least delay) your mortgage payments.
If your mortgage is a conventional one, you need to contact your lender immediately and find out whether or not you're eligible for relief and what documents or evidence you'll need to present to get it.
If your mortgage is insured by the Federal Housing Administration (FHA), you've got a few more options at your disposal. Let's look into what you can do.
How Can The FHA Help?
The FHA expects its lenders to use good judgment in determining whether you were negatively impacted and are thus an "affected borrower." FHA lenders need to evaluate every delinquent loan separately. That's why you need to get in touch with your lender and inform them of your situation. Here are a few actions your FHA lender can potentially take:
If you were affected, your lender could decide not to refer your loan to foreclosure during the legally authorized period of delay (also called a foreclosure moratorium).
You may be evaluated for available assistance to mitigate your losses and help you keep your home.
To help you keep and continue to pay for your home, your lender has the power to modify your loan, execute a partial claim, or put a forbearance plan into effect.
A foreclosure moratorium on an FHA-insured loan is automatic in some circumstances:
You automatically have a ninety-day Foreclosure Moratorium if you live within the declared disaster area's geographic boundaries.
You qualify for Moratorium if a person from within your household is missing, injured, or deceased as a direct result of the event.
You would qualify for Moratorium if your financial ability to continue paying your mortgage were directly affected by a catastrophe.
If a family is delinquent on their home loan, but within the geographic boundaries of the Presidentially-declared disaster area, the FHA lenders will automatically stop all foreclosure actions against them. It's important to notify your lender and ensure that they know you're an affected borrower. Don't be surprised if your lender requests supporting documentation to determine whether you meet the predetermined relief criteria. Once they have verified you as an affected borrower, they will halt foreclosure proceedings for the moratorium period, whatever the legally-determined duration may be.
Only borrowers who are behind on their FHA loans are eligible for a Foreclosure Moratorium. If you are not delinquent on your mortgage and can continue your loan payments, then that's what you should do.
If your home was damaged, or the event caused financial difficulties that have compromised your ability to meet payments in the future, contact your lender immediately and request assistance. You can call (800) 569-4287 toll-free to get in touch with a HUD-approved counseling agency, or go online and contact the HUD's National Servicing Center.
Disasters are unpredictable and uncontrollable, and they can destroy lives and properties in minutes. These make them a homeowner's worst nightmares. The best protection you can have is planning and adequate insurance. If you don't have that, the government can help but don't expect that they will restore your previous life. What they can give is limited, and there will still be a lot for you to do.
Remember: even in the bleakest moments, there is still hope. If you act intelligently (and decisively) you can make the best of this unfortunate situation, survive and even thrive!
FEMA Individuals and Households Program
SBA Disaster Loans
HUD National Servicing Center
FHA Disaster Information