October 1, 2021
In many cases, the FHA and HUD make announcements about disaster relief after tropical storms, hurricanes, forest fires.
But you don’t have to experience a Category 3 hurricane to be severely affected by weather; one excellent example of this comes with the HUD announcement of federal disaster assistance for parts of the State of Vermont that were in the path of severe storms and flooding at the end of July 2021.
On September 29, 2021, there was a Presidential Major Disaster Declaration for two Vermont counties–Windham and Bennington.
Thanks to that Presidential declaration, HUD has offered an automatic 90-day foreclosure moratorium for those two counties–this affects those with FHA mortgages, “commenced on the date of the Presidential major disaster declaration, and foreclosures of mortgages to Native American borrowers guaranteed under the Section 184 Indian Home Loan Guarantee program” according to the HUD press release.
Note that this is an automatic moratorium on foreclosure action–it is NOT an automatic loan modification agreement, or an automatic loan forbearance measure.
For those, you must contact your loan servicer and begin the process of making those arrangements.
FHA home loan modification and FHA loan forbearance are options that are never automatic; you MUST work with your loan servicer (not a third party or anyone who asks you go sidestep your lender) in order to get such assistance.
Those who had homes damaged or destroyed in the affected areas (Windham and Bennington counties) also have the option of applying for FHA 203(h) Rehabilitation Loans for those who need to replace or repair the property in a Federally-declared disaster area.
These loans may be used as a standalone or in conjunction with an FHA 203(k) Rehabilitation loan or refinance loan for those who want to remodel or repair a home.
You should also consider what steps to take with your home–don’t allow yourself to be rushed into insurance settlements as you consider whether to repair or completely replace the property.
FHA rehab loans in general can be used to save a home, but also to replace one that has become uninhabitable due to storm damage, flood damage, etc.
If you have had your home damaged in a natural disaster, contact your lender first, but also reach out to the FHA (call them at 1-800 CALL FHA), the Federal Emergency Management Agency (FEMA), and even the Small Business Administration (SBA).
The SBA offers certain types of disaster recovery options (via participating lenders or other agencies) for those in federally declared disaster areas–don’t let the word “Business” in the name fool you into thinking you don’t have options for disaster recovery from SBA-provided sources.
The SBA official site reminds, “SBA provides low-interest, long-term loans for physical and economic damage caused by a declared disaster. They include home and personal property, business and economic injury loans.”
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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