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HUD Mortgagee Letter addresses revised downpayment, maximum mortgage requirements.

Sep 21, 2008

HUD, FEMA announce 18-month housing assistance program for families displaced by Hurricane IkeMortgagePress.comHUD, FEMA, Hurricane Ike, Texas The U.S. Department of Housing and Urban Development (HUD) and the Federal Emergency Management Agency (FEMA) has announced a rental assistance program that will provide temporary rental payments and case management services to help thousands of families who were displaced by Hurricane Ike. The new program, slated to begin Nov. 1, 2008, will help these families find intermediate housing as they rebuild their lives. "It is critical that we provide a degree of stability in the lives of these families until they can get back on their feet," said U.S. Housing and Urban Development Secretary Steve Preston. "Knowing you have a roof over your family's head for the next 18 months should alleviate at least one major concern." "Today we are reaffirming our commitment to help Texas and its citizens recover from the damages sustained from Hurricane Ike. FEMA and HUD have moved quickly to support Texas's housing needs, and we are moving faster than ever to provide needed resources and assistance to achieve the state's recovery and housing plans," said FEMA Deputy Administrator Admiral Harvey Johnson. "Texans whose lives have been turned upside down by Hurricane Ike are not alone as they face the task of rebuilding their lives," said Texas Governor Rick Perry. "Fortunately we have a variety of state and federal resources to help Texans through the restoration process. I am thankful for our partners at HUD who have responded quickly and effectively to our requests for assistance." FEMA and HUD agreed on a program that mirrors the successful program that housed families following the 2005 hurricanes, which continues to support 30,000 families. The Disaster Housing Assistance Program-IKE (DHAP-IKE) will be executed through an interagency agreement between FEMA and HUD. It is slated to run for 18 months, beginning November 1, 2008. FEMA will determine the families that qualify for assistance. HUD, working with an extensive network of public housing agencies (PHAs) that already administer the DHAP program for families displaced by Hurricanes Katrina and Rita and HUD's regular rental assistance program, will oversee and manage the program. Initially, HUD will provide full rental assistance to approved families. Beginning May 1, 2009, families will be responsible for paying $50 per month. Every month thereafter, the family's portion of the rent will increase in increments of $50 until the program ends in April 2010. This approach has been successful in leading families closer to complete housing independence under the original DHAP program. DHAP-IKE will be implemented as follows: • Families in need of assistance must register with FEMA by calling 1-800-621-FEMA (3362) or online at • HUD will use its network of local Public Housing Agencies (PHAs) to administer the program where families reside. • FEMA will begin referring families to HUD by Oct. 15, 2008, so that HUD can contract with its local PHAs for the delivery of DHAP-IKE services starting November 1, 2008. • Prior to Nov. 1, 2008, PHAs will contact eligible families referred by FEMA to begin outreach and intensive case management services to help displaced families rebuild their lives. • Beginning Nov. 1, 2008, HUD will begin making rental payments to families declared eligible by FEMA who have been placed in rental housing. • PHAs will contact landlords and ensure the necessary documents are in place so that those families will continue to receive uninterrupted assistance payments through DHAP-IKE. • PHAs will work with families and landlords to enter into rental assistance contracts as soon as families are referred by FEMA and begin case management. • PHAs will pay the higher of the Fair Market Rent rate or the PHAs payment standard. All eligible families will begin contributing $50 toward their rent starting May 1, 2009. Every month thereafter, the family portion of the rent will increase in increments of $50 through March of 2010. • The program provides a hardship waiver of the $50 Incremental Rent Transition (IRT) for families that prove that they cannot afford the rent increment. The details of the hardship provision will be spelled out in standard operating procedures that will be published shortly. • Starting in August 2009, families whose rent burden does not exceed 30 percent of post disaster gross income, taking into account existing mortgages for personal residences that remain uninhabitable, will no longer be eligible for DHAP-IKE. • Families whose rent burden and mortgage exceed 30 percent of post disaster income, will continue to be receive assistance, subject to the IRT, through March 2010 when the program ends. There will be family obligations as part of this program which will include: • Family must abide by the terms of the lease and maintain the unit in good condition; Family must participate in case management services; • When IRT begins, family must agree to pay their portion of rent on time and in full; and • Family must accurately and honestly certify the receipt of benefits from either Small Business Administration grants or loans, insurance proceeds, or any other duplication of benefits.
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