FHA Expands Foreclosure Relief to Disaster Impacted Markets
The Federal Housing Administration (FHA) has expanded mortgage relief to FHA-insured homeowners who live or work in areas impacted by last year’s Hurricanes Harvey, Irma and Maria and the California wildfires and subsequent flooding and mudslides.
The FHA has also introduced a Disaster Standalone Partial Claim option designed to help struggling borrowers resume their pre-disaster mortgage payments without payment shock. This option will cover up to 12 months of missed mortgage payments via an interest-free second loan on the mortgage, which is only payable when the borrower sells the home or refinances their mortgage. In addition, this new option requires 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.
The FHA has also instructed mortgage servicers to offer additional options to eligible disaster victims that will enable them to remain in their homes while reducing losses that would otherwise negatively impact FHA's Mutual Mortgage Insurance Fund. Homeowners in the Presidentially Declared Major Disaster Areas of California, Florida, Georgia, Louisiana, South Carolina, Texas, Puerto Rico and the U.S. Virgin Islands are eligible for these options and benefits.
"It's clear that FHA homeowners in these areas need more help to get back on their feet as they recover from these storms," said Housing and Urban Development 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."