FHA greenlights re-inspections of homes hit by volcanic eruption
The Federal Housing Administration is providing a new waiver that gives mortgage companies the ability to start inspecting properties affected by Kilauea Volcano lava flows in Hawaii.
"Lava Flow Zones 3-9 on the Big Island of Hawaii have stabilized to the extent that further damage to the properties appears unlikely, despite FEMA not having closed its incident period," the FHA noted in a bulletin.
However, the agency also warned lenders and servicers that "additional lava flow zones could be added until the incident period has closed."
The FHA generally requires mortgagees to wait until the end of the Federal Emergency Management Agency's incident period to inspect damage from a natural disaster in order to ensure the re-inspection accounts for the totality of the damage that might occur from the event.
But the FHA is giving mortgage companies more flexibility to start the re-inspections earlier in response to recent industry concern about the timeline's effect on pending sales.
Mortgage companies have had to contend with several types of natural disasters in the past year. In addition to May's volcano eruption in Hawaii, wildfires are a growing concern in California, and 2017's hurricane season was unusually severe.
While mortgage companies may want to avoid delays when it comes to loan closings affected by natural disasters in order to minimize mortgage pipeline fallout from them, re-inspections rarely can occur immediately.
"There are a number of factors that impact the ability to provide timely responses; first and foremost the safety of inspectors and contractors, as well as accessibility, road conditions and debris," Tony Maher, a director at Cyprexx Services, said in an interview.