FHA mortgage options after natural disasters

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Anyone who has been through a natural disaster knows all too well the damage that is caused. Trying to pick up the pieces after a sudden and devastating event can be an extremely stressful process. The last thing anyone who has lost a home in a natural disaster wants to think about is how they are going to make mortgage payments. The good news is that there are trained professionals ready and willing to contribute to making life a little easier for those who have lost so much. With the recent Hurricane Matthew that affected North Carolina, South Carolina, Georgia, and Florida, the President has issued a disaster declaration. The US Department of Housing and Urban Development has responded to assist residences who have been affected. If your mortgage is a traditional one, then you must contact your lender immediately for solutions. If your mortgage is FHA-insured, then below are the following options that may help you.

Immediate foreclosure relief

If your home has suffered damage from the disaster, you have no resources (i.e. insurance) to meet your mortgage obligations, and you have already missed a mortgage payment, then you are protected under a Foreclosure Moratorium. This means your lender cannot foreclose on your home for the next 90 days.

If you have not defaulted on your loan, then you are obligated to continue servicing your mortgage loan. However, if you foresee difficulty in meeting your next payment as a result of the disaster, then you need to contact your lender, in which case they may waive any late fines that typically apply.

The official FHA website states that “HUD has instructed FHA lenders to use reasonable judgment in determining who is an ‘affected borrower.'” This means that if your house was damaged, and your mortgage payments were up to date before the disaster, but you are now unable to make the coming month’s payment, your lender may be able to waive the late fees. Additionally, they will speak with you about other available options that fit your specific needs. You may be required to provide supporting documentation to confirm your situation was a result of the disaster. Your lender will assist you in finding loss prevention measures, or come up with a plan to help you retain your property known as forbearance. If your home is unsalvageable, then your lender may accept the deed to the home instead of foreclosing on the property that would affect your credit score.

If You Were Behind in Your Mortgage Payments

By the FHA website, if your home was damaged and you were behind in your payments before the disaster, you may be eligible for a foreclosure moratorium. This means that you could be given a 90-day pause in payments. If you reside within the limits of the declared natural disaster, you automatically receive a 90-day moratorium. If your financial standing has been affected by the disaster, rendering you unable to submit immediate payments, you will also be granted a 90-day postponement of fees. And finally, if a member of your household was announced “deceased, missing, or injured” as a result of the disaster, you are also eligible for a moratorium.

Rehabilitation Mortgage Insurance program

This program applies for general renovation and not just as a result of a disaster. If you bought a home that requires renovations, then you can apply for this program that will wrap the costs with your mortgage as one regularly serviced payment. The 203(k) program is also applicable to repairs or renovations greater than $5000 to currently owned property.

Mortgage Insurance for Disaster Victims program

If you are rebuilding or repurchasing another home due to the disaster, you could qualify for the 203(h) program whether your home was partially damaged or destroyed. This program allows you to purchase a home with no down payment, but you will have to pay a financeable upfront fee along with non-financeable monthly premiums that is added to your mortgage payments. Note that there is a limit to the amount extended on this program.

Although dealing with the aftermath of a natural disaster is a painful procedure, there are helpful options that are readily available. By getting in contact with you FHA lender, you will be able to access the options available to you and let the FHA ease your burden.   The first step is to contact your lender and insurance agent to find out which of the above options could help you. If your agent is not able to help you, and you are a victim of Hurricane Matthew, then you can contact me for counseling services at eric.frazier@thepowerisnow.com or visit my website at www.thepowerisnow.com

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