FHA Offers Storm-Related 'Job Insurance'

In response to hurricanes Katrina and Rita, HUD will allow Federal Housing Administration servicers to advance up to 12 monthly mortgage payments to homeowners in disaster areas who are temporarily unemployed or who are living in rental housing while their homes are being repaired."It is FHA's equivalent of unemployment insurance that will allow [servicers] to keep mortgagors current who are not able to go back to work," said FHA Deputy Director Laurie Anne Maggiano. The monthly advances will be covered by a note that must be paid off when the property is sold. In addition to making advances, servicers can modify the loan and reduce the monthly payments if the FHA borrower has to accept a lower-paying job. The Department of Housing and Urban Development will be issuing a mortgagee letter soon that spells out the new advance and loan modification policy, Ms. Maggiano told an FHA conference sponsored by the National Real Estate Development Center.