FHA DISASTER VICTIMS MORTGAGE

First and most importantly, I hope this email finds you safe with minimal impact from the recent storms.

I am getting lots of inquiries about helping those that lost their homes, their apartments they rented, or were severely damaged by the effects of the recent hurricanes. While FHA offers a solution up to 100% loan to value, there are some key details that are needed from potential candidates.

Product Name: FHA 203(h) – Disaster Victims Mortgage 

First, they would have to document that the home was located in a disaster area and the case number assigned within 1 year of the date the disaster was declared and have documentation from a third party that the residence was damaged or destroyed to such an extent that reconstruction or replacement is necessary.  Below are some key points:

Application Deadline

The FHA case number must be assigned within one year of the date the PDMDA is declared, unless an additional period of eligibility is provided.

Property Eligibility

The previous residence (owned or rented) must have been located in a PDMDA and destroyed or damaged to such an extent that reconstruction or replacement is necessary. A list of the specified affected counties and cities and corresponding disaster declarations are provided by the Federal Emergency Management Agency (FEMA).

The purchased or reconstructed Property must be a Single-Family Property or a unit in an FHA-Approved Condominium Project.

Eligibility Documentation Requirements

The Mortgagee must document and verify (third party, with pictures) that the Borrower’s previous residence was in the disaster area and was destroyed or damaged to such an extent that reconstruction or replacement is necessary. Documentation attesting to the damage of the previous house must accompany the mortgage application. If purchasing a new house, the house need not be located in the area where the previous house was located.

(1) Credit

For Borrowers with derogatory credit, the Mortgagee may consider the Borrower a satisfactory credit risk if the credit report indicates satisfactory credit prior to a disaster, and any derogatory credit subsequent to the date of the disaster is related to the effects of the disaster.

(2) Income

If prior employment cannot be verified because records were destroyed by the disaster, and the Borrower is in the same/similar field, then FHA will accept IRS Form W-2s, Wage and Tax Statement, and tax returns from the Internal Revenue Service (IRS) to confirm prior employment and income. The Mortgagee may also include short-term employment obtained following the disaster in the calculation of Effective Income.

(3) Liabilities

When a Borrower is purchasing a new house, the Mortgagee may exclude the Mortgage Payment on the destroyed residence located in a PDMDA from the Borrower’s liabilities. To exclude the Mortgage Payments from the liabilities, the Mortgagee must:

• obtain information that the Borrower is working with the servicing Mortgagee to appropriately address their mortgage obligation; and

• apply any property insurance proceeds to the Mortgage of the damaged house.

(4) Assets

If traditional asset documentation is not available, the Mortgagee may use statements downloaded from the Borrower’s financial institution website to confirm the Borrower has sufficient assets to close the Mortgage.

(5) Housing Payment History

The Mortgagee may disregard any late payments on a previous obligation on a Property that was destroyed or damaged in the disaster where the late payments were a result of the disaster and the Borrower was not three or more months delinquent on their Mortgage at the time of the disaster. The Mortgagee may justify approval if the Borrower was three or more months delinquent if extenuating circumstances are documented by the Mortgagee.

Surviving a hurricane is a testament to your resilience and preparedness. While the immediate aftermath can feel overwhelming, knowing the right steps to take can make a significant difference in your recovery process.

Please feel free to reach out if you need any help with this product or others.