HUD's Disaster Assistance Coming To The Rescue
The Department of Housing and URBAN Development is speeding up federal disaster assistance to the states of Minnesota and Idaho rushing support to homeowners and low-income renters forced from their homes following flooding, landslides and mudslides during March and April.
HUD’s Community Development Block Grant and HOME programs will give the states and communities some flexibility to redirect emergency funds for repair and replacement housing needs. Assistance includes immediate foreclosure relief. HUD granted a 90-day moratorium on foreclosures and forbearance on foreclosures of Federal Housing Administration-insured home mortgages.
Housing and Urban Development secretary Shaun Donovan said the president’s declaration allows HUD to offer foreclosure relief and other assistance to certain families living in the worst-affected counties. “Whether it’s foreclosure relief for FHA-insured families or helping these counties to recover, HUD stands ready to help,” he said.
HUD will share information with the Federal Emergency Management Agency and the states affected by the disasters about all the housing funds provided.
HUD’s Mortgage Insurance for Disaster Victims Section 203(h) makes FHA insurance available to disaster victims who have lost their homes allowing borrowers served by participating FHA-approved lenders to receive 100% financing including closing costs.
The insurance is granted on both mortgages and home rehabilitation financing of the purchase or refinance of a house along with repairs through a single mortgage, and the rehabilitation of existing single-family homes.
While similar to the basic Federal Housing Administration mortgage insurance program, the program provides mortgage insurance to protect lenders against the risk of default on mortgages to qualified disaster victims in areas designated by the president as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary.
No downpayment is required, yet even though the borrower is eligible for 100% financing, closing costs and prepaid expenses must be paid by the borrower in cash, through premium pricing, or by the seller up to 6%.
Banks, mortgage companies, and savings and loan associations are eligible for Section 203(h) insurance.
Anyone whose home has been destroyed or severely damaged in a federally declared disaster area is eligible to apply for mortgage insurance under the program.
However, the Department of Housing and Urban Development limits the amount to be insured within the dollar value of the mortgages that serve low- and moderate-income homeowners.
The agency is simultaneously providing assistance to other states, such as North Dakota, which also is part of President Obama’s disaster declaration for Bottineau, Burke, Divine, Dunn, McKenzie, Mountrail, Renville, Ward and Williams counties in the state.